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Terence Corcoran: Consumers’ choice is being traded for pricey, feel-good ideologies
Two identical table lamps in my living room now have two different light bulbs. To my eye, the quality, colour and brightness of the light from the two bulbs is virtually identical — the same soft and warm light we’ve all come to expect from the century-old light-bulb technology patented by Edison a century ago. But there’s a key difference: One of the bulbs is a 19-watt Philips LED Soft White bulb purchased recently at Home Depot for $29.98. The other is a Philips Soft White 100-watt bulb also purchased the other day at Home Depot — for 30 cents.
Here’s the catch: That 30-cent bulb is about to be technically banned. Under regulations issued recently by Natural Resources Canada (NRCan), the standard 100-watt bulb will be phased out of Canada beginning Jan. 1, 2014. Some 100-watt bulbs will continue to be available, but only until retailers run out of inventory in the next few months.
The January 1st de facto Canadian ban on the existing 100-watt bulb — in effect in the United States since 2012 — is to be followed in Canada by removal of the standard 40-watt and 60-watt bulb on Jan. 1, 2015. In the United States, the ban on 40-watt and 60-watt bulbs takes place this coming Jan. 1. The last day for comment on Canada’s new harmonized light bulb standards is in just a few days: December 19.
Energy efficiency standards are not Big Government run amok; they’re Big Government at its best
Approval for the new standards seems certain, which means that the next two years are shaping up as a make-or-break period for what has become a major test of a new policy phenomenon: the mandated green industrial strategy.
In preparation, some consumers on both sides of the border have been stockpiling soon-to-be-banned bulbs of all sizes. Others are searching for substitutes for the $29 LED budget-buster. Alternatives are coming to market — including new hybrid bulbs known as incandescent halogens. They look more or less like old-fashioned tungsten-burning bulbs but are built around halogen technology for greater efficiency. They last a little longer, but are still priced higher, at about $2 for a bulb that’s comparable to the soon-to-be banned 100 watt.
But even these new halogen bulbs are seen by regulators in the U.S. and Canada as a stopgap technology, a temporary compromise to appease consumers who have balked at high prices for fancy new bulbs and remain unmoved by claims of greater energy efficiency or calls to reduce their carbon footprint. Given a choice between a $29 or even an $8 bulb and a perfectly functional 30-cent bulb, they would rather use the cash difference on something more tangible than a slightly lower energy bill and the feel-good belief that they will reduce carbon emissions.
For a large number of consumers in lower-income groups, the trade-off is unthinkable, even impossible. (See the table for one comparison of the four major bulb types now on the market).
The disappearance of the traditional non-directional incandescent light bulb is the product of an unprecedented international regulatory push that began in Europe. The objective, backed by some manufacturers and the usual collection of green activists, is to rid the world of the allegedly environmentally damaging but cheap-as-hell incandescent bulb. There’s a ripe conspiracy theory out that the big bulb makers, led by Philips, actually concocted the incandescent bulb bans in league with environmentalists, so they could sell higher-margin replacement bulbs.
All about lightbulbs
The efficiency of light bulbs is measured by the amount of light produced in lumens per watt of electricity consumed (lm/W).
Incandescent bulb: Produces light with a filament wire heated to a high temperature by an electric current passing through until it glows. The luminous efficacy of a typical incandescent bulb is 16 lu/W.
Incandescent halogen: An incandescent lamp that has a small amount of a halogen such as iodine or bromine added. The combination of the halogen gas and the tungsten filament produces a halogen-cycle chemical reaction that redeposits evaporated tungsten back onto the filament, increasing its life and efficiency, at 22 luW.
Light-emitting diode (LED): LEDs use semi-conductors as the light source. When a light-emitting diode is switched on, electrons recombine with holes within the device, releasing energy in the form of photons. Efficiency rating on the Philips 19-watt LED is 88 lu/W.
Compact flourescent (CFL): A variation on traditional flourescent technology, with efficiency ratios of equal to LED. The Philips 23-watt CFL has an lu/W of 80.
Source: Wikipedia, Natural Resources Canada
Whether that’s true or not, the world of business and consumer product development and marketing has never seen anything quite like it. Consumer choice has been removed and replaced by joint regulatory bodies overseen by a troika of corporate interests, green ideologists and government bureaucrats. Can governments dictate technological change by outlawing old technology and subsidizing the new — even if the cost is high and consumers do not what it?
As with the expensive and limited-range electric cars, experience shows many consumers — for many reasons — do not want new and more expensive light bulbs. One of the replacement technologies hyped by marketers and backed by government rebates over the last couple of years, the compact fluorescent light (CFL) bulb, has already run out of market steam. CFL sales have peaked in the United States and Canada. As NRCan bluntly put it recently, CFLs have stalled because of concerns about “mercury content, the method of their proper disposal, their perceived associated health effects, and their performance.” CFL bulbs are also non-dimmable, a major functional problem for consumers.
Data from the U.S. National Electrical Equipment Association show that CFL sales plateaued at 25% of the market for non-directional (also known as A-line) bulbs, and are now in decline. Meanwhile, sales of the new incandescent halogen bulbs are taking off, rising at a rate of 30% a quarter, hitting 10% of market share last quarter, up from near zero two years ago. “It looks as if the halogen light bulb is going to be the light bulb people buy,” said Terry McGowan, a U.S. lighting industry veteran and director of engineering for the American Lighting Association.
The incandescent halogen could also get more energy efficient in the near future. One bulb innovator, Advanced Lighting Technologies, based in Ohio, claims to be developing designs and equipment that can manufacture new halogen versions of the standard light bulb that are up to 50% more efficient. Steve Stockdale, an executive at the company, says new and better incandescent bulbs will be rolled out within six months.
Aside from generating consumer confusion and blowback over costs and technologies, the emergence of a global light-bulb industrial complex has produced sharp ideological divides. For some, the use of forced mandates to shape commercial development demonstrates the effectiveness of government industrial regulation. “Energy efficiency standards are not Big Government run amok; they’re Big Government at its best,” said a Time magazine writer.
On the other side are vociferous free-marketers, especially in the United States, who see the heavy-handed government intervention as a major infringement on individual rights. At freedomlightbulb.org , the battle against U.S. and Canadian policy rages daily. Freedom of choice is under threat. Today the government takes away our light bulbs, tomorrow they’ll come for our dogs and cats.
At the same time, however, the incandescent light bulb ban has unleashed what looks like an unprecedented outburst of capitalist innovation, with companies competing to create new products and new technologies to meet the demands of consumers while negotiating the escalating mandates handed down by government in the name of energy efficiency and climate change. “The competition among manufacturers is as aggressive as I’ve ever seen it,” said Mr. McGowan. “Prices are going down and the industry is doing everything it can to fill the sockets.”
There are a lot of sockets to fill — an estimated four billion non-directional light sockets in the Canada and the United States, each constantly in need of refills. But the new bulbs present their own marketing problems. With new bulbs such as LED models having alleged lifespans of 20 years or more, the major bulb makers — Philips, GE, Osram Sylvania and others — want to make the sale today. “They know that if they don’t, they won’t get to refill that socket for another five to 10 years or whatever,” said Mr. McGowan. It’s a different game compared with supplying the market with fresh cheap generic bulbs to replace the old cheap generics that burned out annually.
The big question remains: Will consumers ever want to buy expensive bulbs today that will last a quarter of a lifetime? Maybe not. To get consumers to pay $30 for a bulb has required government rebates — currently $5 in Ontario for LED bulbs; $8 to $12 in B.C. depending on bulb type. Such programs and claims of energy and green benefits failed to establish CFLs as the official replacement of the old incandescent.
The collapse in growth for sales of CFLs is the major reason Natural Resources Canada, along with regulators in the United States, have been forced to roll back their original regulatory ambitions. NRCan had visions of a CFL-dominated bulb market that would generate big reductions in electricity use and greenhouse gas emissions. In 2008, NRCan originally claimed a net benefit of $332-million a year between now and 2025 if Canada adopted new U.S. standards that would force removal of bulbs that did not meet certain efficiency levels. With CFL sales stalling, the U.S. relaxed the efficiency standards to allow for the new halogen bulbs, which currently cut energy use by slightly more than 28%, less than earlier, more ambitious efficiency standards.
By adopting the new U.S. regime and essentially harmonizing Canada-U.S. incandescent bulb standards, Canada also has new and more realistic cost-benefit analysis. If Canadians adopt the new halogen as the dominant bulb for 75% of the market, NRCan’s predicted annual net benefit to the Canadian economy is all of $94-million.
That’s a whopping $3 for each Canadian per year, and a good indication that, as the regulations and new bulb technologies unfold, reductions in energy consumption and carbon emissions are likely to be minuscule for some time — if they ever materialize. Lighting accounts for 10% of Canadian home energy use, and the light-bulb policy might reduce that by a couple of points.
So much for the experiment in green industrial strategy making. For that paltry savings, billions of dollars will have been sucked up by new product development and marketing, disrupting retail distribution channels, creating potentially massive but uncalculated net losses to the economy.
But that is not the end of it. This past week the U.S. Department of Energy announced it would start a new rule-making process to review the light-bulb regime, suggesting a new regulatory attack on the new, less-unpopular incandescent halogen bulbs could be in the works. If so, Canada will automatically follow suit under the new harmonization approach.
It might not be a bad idea to keep that stockpile of incandescents around for at least another year or two.
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