There's been an illuminating development in the battle in the US Congress to avoid a federal shutdown. The $1 trillion spending bill, agreed last night, runs to more than 1200 pages and includes all manner of provisions inserted at the last minute in order to garner sufficient bipartisan support to ensure passage.(Note A)
One of those last-minute changes was a rider defunding the Department of Energy's standards for light bulb efficiency that would have gradually outlawed traditional incandescent bulbs. The result of an energy law signed in 2007 by then-President George W. Bush, the DOE standards were to have been phased in gradually; the first victims would have been 100W incandescent bulbs, which would have been outlawed as of 1 January 2012, a fortnight hence. Grass-roots Republican supporters had seized on the ban, making it a cause-celebre, and the issue has been at the forefront of talk radio and Tea Party-type discussions for months. Democrats railed against the rider, but managed to eke out what they consider a win by including provisions requiring recipients of federal grants in amounts of $1 million or more to certify that they will upgrade the efficiency of facilities to the 2007 lighting standards.(Note B)
The light bulb ban is one of those rare issues that seems to galvanize the disparate ends of the political spectrum. Democrats justified the ban by citing the impending extinction of polar bears and the drowning of coastal cities; Republicans countered with charges of war-against-the-poor and historical treason against the sainted memory of Thomas Alva Edison. Lost in all the rhetoric, as usual, was the bulk of empirical fact, to wit, that while incandescent bulbs consume more electricity to operate, the lowest-cost alternative - compact fluorescent bulbs - are far more expensive than incandescent bulbs, contain liquid mercury, rarely last as long as advertised, must be disposed of as toxic waste, and are virtually all made in China (and thus must be shipped across the ocean on oil-powered cargo ships). One reason for the manufacturing location is that China is virtually the world's only source of the rare earth elements used in the phosphors coating the interior of the CFL tubes. The next generation of candidate illumination, LED lights, are even more expensive (due primarily to the need for a heavy and costly heat sink) and unless of very high quality, do not come close to mimicking the characteristics of incandescent bulbs.
As an exercise in cost-effectiveness, I ran the numbers on these back in March (see "Are governments smarter than a5th-grader?, 8 March 2011"), and concluded that the payback period for LED bulbs is about 6 years. I'm six months [17 months, now! - ed.] into that on my office light bulbs right now and they're all still working; let's see how that goes.
Of course, the cost-effectiveness calculation is only one part of the equation. The unit cost of the spotlamps I bought was $35, about 30 times the cost of a comparable incandescent spotlamp. The average wage-earner isn't in a position to engage in costly experimentation with novel lighting technologies; if you're pulling down $35K a year as a general labourer, $35 for a single light bulb might seem a little outrageous. That, in my opinion, is what fuelled much of the discontent with the DOE standards that would have led to the demise of the incandescents about two weeks from now. Of course, the visceral response by many Americans to the government telling them what light bulbs they can and can't buy probably had something to do with it, too; live free or die, and all that. You can have my incandescents when you pry them from my cold, dead hands...
What I find especially interesting from a strategic analysis perspective is how some in the environmental lobby responded to the news that the bill effectively lifted the impending ban. Jim DePeso, the policy director of the group "Republicans for Environment Protection", was quoted as saying:
"In the real world, outside talk
radio's echo chamber, lighting manufacturers such as GE, Philips and Sylvania
have tooled up to produce new incandescent light bulbs that look and operate
exactly the same as old incandescent bulbs, and give off just as much warm
light...The only difference is they produce less excess heat and are therefore
30 percent more efficient. Same light, lower energy bills. What's not to
like?"
Well, Jim, as I pointed out above, there's a
lot not to like. But what DePeso is referring to is a new suite of bulbs
like the Osram Sylvania, a halogen bulb that reportedly replicates 100-W
performance while consuming only 72W of current.(Note C)
The
Osram Sylvania 72W halogen bulb
Unlike the CFLs, Sylvania makes the Osram,
which doesn't contain mercury, in Mexico. But there's another
strategic problem, you see - unlike traditional incandescents, these bulbs
require rare earth phosphors. This prompted Sylvania to issue a
consumer notice earlier this year:
Rare earth metals are elements
vital to the manufacturing of our energy-efficient fluorescent lamps as they
are a crucial component of the light-producing tri-phosphors inside the lamps.
Currently, 95% of the world’s rare earth metal mining and oxide production
comes from China where the manufacture and export of these compounds is heavily
taxed and controlled.
The Chinese government has implemented
new tariffs and mining regulations on rare earth materials. These actions,
coupled with increasingly strict export quotas, have caused the price of these
compounds to substantially increase – as much as 3500% since January of 2010 in
some cases.
Due to regulation, exports of rare
earth materials were reduced 40% from 2009 to 2010 and another 35% during the
first half of 2011 compared with prior year. It is clear that the Chinease [sic] policies regarding rare earth
materials must be addressed with multiple strategies in order to stabilize
pricing and supply of these critical minerals.
OSRAM SYLVANIA has and will continue to
take steps to combat these rising costs. We have continued to strengthen our supply
chain while spurring our research and development teams into action. We are
investigating the ability to reduce the weight of powders used in fluorescent
lamps while evaluating alternatives to the current phosphor combinations. However, despite our best efforts,
the rising cost of rare earth oxides has outpaced our ability to absorb them.
In order to combat the steep rising costs of these raw materials, OSRAM SYLVANIA will increase pricing on our fluorescent lamps, including our T8, T5, Deluxe T12 and all CFL pin and self-ballasted lamps. These increases will go into effect July 1, 2011; August 1, 2011; and then monthly until the cost of rare earth materials are stabilized.(Note D)
In order to combat the steep rising costs of these raw materials, OSRAM SYLVANIA will increase pricing on our fluorescent lamps, including our T8, T5, Deluxe T12 and all CFL pin and self-ballasted lamps. These increases will go into effect July 1, 2011; August 1, 2011; and then monthly until the cost of rare earth materials are stabilized.(Note D)
What does that mean for the bulbs that Mr.
DePose thinks are the next big thing, infinitely preferable to traditional
incandescents? Well, it means that they're going to get more
expensive. And they're not exactly cheap right now. The
72W Osram Sylvania goes for $8.20, which is more than ten times the price
of a 100W Phillips Duramax, which retails for $2.98 per four-pack at Home
Depot. But the Osram isn't ten times as efficient (it uses 72% of the
power of the 100W Duramax); and it isn't ten times as long-lived (it's rated
for 3500 hrs, compared to 1500 hrs for the Duramax). So it's already not
much of a deal. Furthermore, as the above statement indicates,
that $8.20-per-bulb price is subject to change without notice due to
the impact of China's near-total rare earths monopoly on REE supplies needed by
the Mexican manufacturer.(E)
As for Mr. DePose's comment about GE, Sylvania,
Philips and so forth gearing up to make the new light bulbs...well, is that a
consequence of consumer demand for vastly more expensive light bulbs? Or
is it a consequence of the 2007 Bush Energy law outlawing incandescent
bulbs that was supposed to come into effect on New Year's Day?
The Great Light Bulb Purge - narrowly
averted by Congress, at least for now - is an excellent example of
the chicken-and-egg relationship of government regulation with consumer
preference in the modern "free" market. Apart from moral
pressure (like the David Suzuki Foundation's recent and ludicrously
hyperbolic "Drowning Santa" campaign), there
are essentially two ways that governments can force consumers to buy
things they wouldn't otherwise buy. One is subsidies - governments giving
taxpayer money to industries to make otherwise non-competitive products cheap
enough for consumers to consider buying them (q.v. wind power, solar power, and
hybrid and electric vehicles - I've got sources if you want'em) - and the
other is regulating technologies deemed 'undesirable' out of
business. This is the source of the philosophy reflected in Obama’s
campaign promise to bankrupt coal-fired electrical generating concerns (Note
F).
Both approaches constitute interference in the
marketplace. And as I've mentioned before in previous missives, both
of these techniques seem to keep popping up, time and time again, in
the political drive towards the 'green energy' economy.
But for the moment, at least insofar as the
venerable incandescent bulb is concerned, it seems as though someone just might
have "seen the light".
(Exclamation of joy at sudden
observation of luminescence expurgated)
Let us therefore give thanks.
Cheers,
//Don//
P.S. A back-of-the-envelope calculation tells us a little bit about the cost comparison. The 72W Osram Sylvania bulb sells for $8.20 online. A 4-pack of Phillips Duramax 100W bulbs costs $2.98 at Home Depot, or $0.75 apiece. The Duramax has a rated lifespan of 1500 hrs; the Osram 72W, 3500 hrs. To get 21,000 hours of light, you'd need 6 Osrams or 14 Duramaxes. 21,000 hrs of Osrams would consume 1512 kWh of electricity. 21,000 hrs of Duramaxes would consume 2100 kWh of electricity. At roughly $0.10 per kWh, the Osrams would cost you $151.2; the Duramaxes, $210. So you're saving $58.80 over 21,000 hrs, or $0.0028 per hour of use. Those 6 Osrams would cost you $49.20, whereas 16 Duramaxes would cost you $12.00. So you're paying $37.20 more for the bulbs, but saving $58.80 on electricity, for a total savings of $21.60 over 21,000 hrs. Unless the Osrams don't last as long as advertised, or their price goes up due to the rare earths shortage, of course.
Notes
A) http://www.politico.com/news/stories/1211/70530.htmlB) http://www.politico.com/news/stories/1211/70534_Page2.html
C) http://assets.sylvania.com/assets/Documents/Consumer_SocketSurvey_FINAL.6f999370-cb88-479f-94e1-a6483531b81f.pdf
D) http://www.sylvania.com/Phosphors/
E) http://www.bulbtronics.com/Search-The-Warehouse/ProductDetail.aspx?sid=0000984&pid=OS72MBCAP120V&AspxAutoDetectCookieSupport=1
F) http://frontporchpolitics.com/2012/07/obama-keeps-campaign-promise-patriot-coal-bankrupt/
