The development of new technologies by manufacturing companies can enable more environmentally sustainable and circular solutions. However, there is a lack of tools to assess the sustainability potential of these technologies during research and development. This paper proposes a novel framework to structure and make sense of sustainability and circularity in technology development projects, relating to both value and environmental impacts. The framework was developed into a tool following the Design Research Methodology, in collaboration with a manufacturing company. The tool was tested in three case studies in manufacturing companies, indicating its broad usefulness. The technology assessment tool enables (1) a quick screening of technical solutions or concepts, (2) the definition of decision-making criteria, and (3) the detection of potential negative environmental consequences of innovative technology, especially trade-offs related to circular economy. It was shown to help technology developers to make informed decisions about the environmental sustainability potential of their innovation projects, and to identify areas for improvement.