Industry pressure threatens € hundreds of millions in energy savings

From 25 August 2015 (we’re migrating the best of our blog from coolproducts.eu)

September will see a battle of industrial interests against long-agreed policies to support super-efficient lighting, with hundreds of millions of Euros at risk for both industry and home energy bills.

Lighting is a big deal, burning through the same amount of electricity as used by all the homes in France, the UK and Italy combined. Everyone agrees LEDs have the brightest future due to their incredible efficiency. So much so that three years ago the EU agreed to a conditional phase-out of inefficient halogen spotlights by September 2016, a date industry was happy with. But not any longer and a fight is on in Brussels and member state capitals to determine whether the most wasteful bulbs on the market will continue to dominate our shelves for years to come.

Stakes are high for old guard lighting firms accustomed to “print money”

Stakes are high for the world’s number 1, Philips, and 2, OSRAM, which for decades have dominated an industry seen to have a “licence to print money”. Thanks to rapidly evolving superior technologies, the going is getting tougher by the day and both companies have decided to sell off their lighting divisions. Winning a few extra years to sell high-profit halogens will buoy their sale price nicely. 158 million mains voltage spotlight halogen bulbs, the type facing extinction, were sold in Europe in 2013, according to research for the Commission. We understand that German company OSRAM shouted the loudest in steering lobby group LightingEurope to call for a two year delay. In reality, OSRAM knows it is calling for a four year delay, to 2020, given how long it will take Brussels to revisit the subject. Coolproducts calculates that such a delay would cost the average European home €101.35 in lost electricity savings annually as families stick with wasteful halogens that seem cheap to buy, but burn a hole in their wallets by consuming nearly ten times more energy than LEDs. This assumes 10 lamps running for 3 hours a day, which is about average.

Philips spends a lot of time and money describing itself as sustainable, so stayed too quiet as LightingEurope set its policy. This despite Philips’ chief lobbyist telling a recent meeting in Brussels that the company wants more ambitious lighting efficiency rules in Europe, and despite company membership of Climate Leaders group, where Philips is described supporting progressive policies and LED technology, and of Prince Charles’ Corporate Leaders, with a focus on climate. Its green credentials appear to have disappeared behind a tall stack of its halogen bulbs.

Despite claims to the contrary, LightingEurope is not the sole voice of the lighting industry in Europe. A company with no legacy business in halogen, Megaman, vociferously backs the halogen phase-out. It is joined by green groups and forward thinking furniture giant IKEA, which just announced it would stop selling all halogens next month, a full year before the phase-out. IKEA’s decision is not surprising when you hear from LED customers. Comments left for one OSRAM LED show a flood of positivity, with a 5-out-of-5 average rating from 39 people. Not bad, given how merciless online shoppers can be in their feedback.

For its part, the European Commission called interested parties together for a meeting in Brussels in late June and said, in a nutshell, ‘we think the legal criteria have been met and the phase-out should go ahead on time, but if you don’t, let us know’. What are the four legal criteria in question? CLASP spells them out in this briefing, along with clear evidence and strong arguments in support of the Commission’s position, a paper backed by Coolproducts.

Of the four criteria, affordability will be a big factor. The two sides of the debate will point to short vs long-term cash gains. Short term, when buying a bulb, LEDs remain more expensive than halogen. But prices are falling at a dramatic rate and bulbs are now on sale that the Commission’s experts thought would only arrive in 2025 (!). Add to that the fact that halogens only last a year or two, while LEDs can last ten times longer. Talking long-term, with LEDs so much more efficient, it’s no surprise which wins the affordability prize. IKEA calculates that a home replacing 10 old bulbs with LEDs will knock £300 a year off their energy bill.

The Commission’s position seems straight forward, but it is up against member states successfully lobbied by the lighting industry. Lobbied so successfully in fact that Hungary, Slovakia and the Czech Republic all use identical ‘copy and paste’ sentences in their submissions to the Commission, all delivered the same day. Poland too, more or less. Bear in mind these are countries where incandescent bulbs are still easily purchased, despite being phased-out in 2012 due to the fact they waste 95 percent of the energy they use as heat, raising lighting bills massively. Ouch. These officials rarely comment on product policies or hold consultation forums to understand national interests, but instead are here clearly regurgitating lobby lines verbatim. Germany is on board too — home advantage for OSRAM, which derives its name from tungsten, the metal used in halogen lighting. France’s position could be important, and remains unknown. It performs badly on product policies, but the Paris climate talks are coming up.

OSRAM has done a great job pushing a distorted view of reality on public officials supposed to be acting in the public interest. In many ways, the company resembles the Wizard of Oz, an apparently all-powerful ruler that uses illusions to influence others, but in reality is just a feeble old man, rapidly losing market share, pulling strings from behind a curtain. OZRAM has been pulling the affordability string knowing full well that the law considers product affordability in terms of life-cycle, not the up-front cost. CLASP has done a great job dispelling this myth and a host of other illusions peddled OZRAM in this briefing.

The wizard, an old man dependent on smoke a mirror tricks to influence others

Still, OZ has been emboldened by a significant victory. In April, the old guard lighting industry persuaded some of the same member states to freeze EU efficiency rules for the first time ever in relation to non-directional light bulbs, costing Europeans €6.6 billion in lost energy savings. The Commission leadership is under a lot of pressure not to make life difficult for member states that are wrestling with the ongoing financial problems, migration, etc.

With just weeks to go ahead of UN climate talks in Paris, in the hottest year ever recorded, and in the context of its the Commission’s new ‘efficiency first’ approach, the Commission needs to stick to its guns. There is more than enough evidence to turn away lobbyists and governments acting more for shareholders than the public.