Do Lighting Standard Delays Threaten Consumer Choice?

In just under two weeks, standard 100 Watt incandescent light bulbs will be officially banned in the US, in the first step of a gradual phaseout of Edison's technology. However, as a result of recent Congressional action, enforcement of this regulation has been delayed by about a year, leaving the bulbs and the retailers who sell them in a temporary limbo. This change adds to the confusion consumers now face when purchasing lighting products, as our choices have multiplied to include compact fluorescent lights (CFL), LEDs, halogen incandescents, and shortly another new option, the "electron stimulated luminescence" (ESL) bulbs produced by VU1 Corporation. The lighting efficiency standard of the Energy Independence and Security Act of 2007 helped to create this diversity, although it remains to be seen to what extent the desired improvement in household energy consumption will actually appear, and whether it will be accompanied by unintended consequences such as a black market in outlawed light bulbs.

When considered carefully, the lighting efficiency standard contains a paradox: It has had the effect of multiplying consumer choice, but by means of a mechanism that will actually limit choice, once it is fully implemented. Nor is this just a US concern. One reason we're seeing so many new lighting technologies on store shelves is that incandescent lights are being phased out in much of the developed world. As shown in Exhibit 17 of a recent report by McKinsey & Company, the phaseout of incandescent lighting is even farther along in the EU and Japan, with Russia and Brazil also winding down sales of these lights. The new lighting options that these measures helped stimulate didn't appear out of thin air; they occurred as a result of significant investments in technology and manufacturing by various companies, all of which are looking for a return on those investments that could be jeopardized by delaying the implementation of the standard.

The ESL bulb is a case in point. The market for it might not exist without the congressionally mandated lighting standard. I learned about VU1's technology through a press release and was immediately intrigued, because the company seems to have circumvented some of the biggest drawbacks of the CFL bulbs that have become the de facto alternative to incandescents in the last few years. ESL lights work like miniature cathode-ray TV tubes--the kind we had before flat-screen TVs became popular--and they apparently contain no mercury. That makes them inherently much safer than CFLs, particularly in households with children or pets. (Anyone unconvinced of the mercury hazard of CFL bulbs should visit the EPA web page providing instructions for how to remediate a broken one.) At an expected price point just under $15 for a 65W-equivalent R30 bulb at Lowe's hardware stores this winter, they should at least be competitive with CFLs.

In addition, the manufacturer claims that ESLs are not susceptible to overheating. That's a valuable feature, because heat buildup in recessed and other fixtures has shortened the life of several of the CFL bulbs I've bought, particularly in "can" fixtures. Without multiple years of additional service, compared to conventional light bulbs, the already situationally dependent economics and environmental benefits of expensive alternative bulbs turn sharply negative.

Economics are a key factor for all these new light bulbs. That even includes the halogen bulbs that are the nearest substitute for conventional incandescents, in both lighting quality and cost. Like many other energy efficiency technologies, advanced light bulbs trade higher initial costs--in some cases dramatically higher--for reduced operating expenses in the form of electricity savings and less frequent replacement. If you can afford to pay cash for them and your opportunity cost is a bank savings account yielding 1% or less, they're generally a good deal, paying for themselves within several years--or even quicker if you live in a region with high electricity rates. However, if your rates are near or below the national residential average of $0.12 per kilowatt-hour, or if you install them in fixtures that aren't used for at least a few hours each day, the payout will take longer. And if you purchase them on a credit card that you don't pay off in full every month, the advantage compared to conventional bulbs can disappear after tallying finance charges.

I plan to try out the ESL lights once they're readily available, but I also believe Congress was right to impose a delay in enforcing the lighting standard, although I would have preferred a less ambiguous method for achieving that. Mandates like the lighting standard, the federal Renewable Fuels Standard and the state Renewable Portfolio Standards for electricity are effectively taxes. In this case, the tax isn't paid to the government or utilities but to retailers and manufacturers. And while such mandates can be effective at achieving environmental targets, they also tend to be regressive, affecting lower-income consumers disproportionately. With a bi-partisan consensus on the undesirability of raising taxes on the middle class in the current, flat economy, the lighting standard delay arguably falls into the same category. The losers from this step will be companies that made investments on the assumption the standard would go into effect as planned. Let's hope their planning included some contingencies for regulatory risk, or some of our new lighting choices might be jeopardized, even as existing choices are preserved.

Do Light Bulbs Matter?

The edition of USA Today delivered to my hotel room yesterday morning included an interesting point/counterpoint concerning legislation that has been introduced to repeal the federal ban on incandescent lighting and the accompanying mandate for energy-saving light bulbs. Both sides included reasonable arguments but missed some key points. It's also important to recall that Congress did not specifically require the use of the compact fluorescent lights (CFL) that have become a focus of controversy, although it did set lighting efficiency standards that CFLs were best positioned to meet at an acceptable cost. Lost in the process is the larger question of whether the impact of more efficient light bulbs is really worth the associated risks and effort, including the economic and employment dislocation of offshoring a large portion of US light bulb manufacturing.

The lighting standard in question was just one provision of the 310 page Energy Independence and Security Act of 2007 (EISA), which also gave us the national Renewable Fuel Standard and more aggressive vehicle fuel economy rules. The case that the editors of USA Today made in defense of the bill's lighting efficiency provisions, which would be repealed by HR.91, the Better Use of Light Bulbs Act, was that it was a small but important step in the direction of saving energy and reducing emissions. They also lauded the bill for eschewing "picking winners" and instead focusing on the outcome of increasing the energy efficiency of lighting by whatever means could achieve that. I'm very sympathetic to that argument, though in this case the deck seems to have been stacked in favor of CFLs, in the absence of another widely-available and low-cost alternative bulb technology compatible with standard screw-in household lights. I'd also question their characterization of the payoff as "huge". I've looked at this before and concluded that the total energy savings involved in the switch amounted to just 2% of our annual electricity consumption--more than offset by higher usage from new devices. Emissions savings looked even smaller, at around 1%. The NRDC analysis cited in the editorial came up with emissions savings of 2%. Either way, more efficient lighting won't turn the US green.

With regard to the CFLs available today we are starting to see evidence that their performance has not measured up to claims, particularly concerning endurance. I have already had to replace a couple of supposedly long-life CFLs in applications involving frequent switching, wiping out any savings that might justify their higher cost. Of much greater concern is the health risk posed by the small quantity of mercury in each bulb. If you've read the EPA's instructions for remediating a room contaminated by a broken CFL bulb, you'd certainly think twice about putting one in any fixture that a child, elderly person or pet might knock over.

In his response to the editors, Representative Barton (R-TX), the author of HR.91, highlighted this risk and emphasized the intrusion of government into what ought to be a normal consumer decision concerning what kind of light bulb to buy. He also cited the transfer of much of the US lighting industry offshore, which is related to the technology of CFL bulbs. The phosphors they use require rare earth elements, for which China is the dominant global supplier. Unsurprisingly, China has gained a leading share of the global CFL industry, and US factories producing incandescent bulbs have closed, leading to higher imports of light bulbs from China and elsewhere.

Time to change course is running short. As of next January 1, the first tranche of the EISA efficiency standard will ban 100-Watt incandescent bulbs, mandating replacements that use at least 28% less energy to produce the same light output. The rules hit standard 75 W bulbs a year later, and 60 W bulbs on 1/1/14.

In my view the problem is less the federal lighting efficiency standard than the fact that CFLs are a poor technology. If it were oil companies, rather than the government, effectively forcing us to put these things in our homes, we would see protests in the streets against the health risks--and by many of the same environmental groups that now back CFLs but are trying to shut down coal-fired power plants that create less mercury exposure than a single broken CFL bulb in your house would. Instead of throwing out the entire lighting standard, we should focus on the most objectionable parts of these rules. Better lighting is on the way, with halogen bulbs now available for more applications, and much more efficient light-emitting diodes (LEDs) likely to become much cheaper in the future. We should stretch out the deadlines for phasing out incandescents to allow time for that to happen. I'd also like to see a "mercury deposit" charge applied to each CFL to ensure the bulbs are properly recycled at the end of their lives, along with a cigarette-style health warning on the packaging, warning consumers of the hazards. The modest energy and emissions savings CFLs produce simply don't justify overriding consumer choice and prudent judgment about where to use them and where not to.