Forced v. Encouraged Energy Market Transformation: Which Works Better?

April 13, 2021, 8:00 AM

One cannot escape the evidence of the technology-driven transformation in the lighting market. This transformation, involving the emergence and proliferation of light-emitting diode (LED) products, has taken a firm hold on the global lighting scene. The success of the uptake and spread of LED products is an excellent example of better products unseating a legacy technology.

Much has been said about the value of LED lighting, for use in the home, for street lighting, in automobiles, and more. What has not been acknowledged clearly in many media sources, until now, is that this transformation is being accomplished without federal government mandates.

A better technology has become available and is being adopted by consumers without being the only choice on store shelves. Adoption of LED technology has been encouraged through local rebate and purchasing programs, and through national consumer market transformation programs such as ENERGY STAR, but LED technology has succeeded despite not being the only technology available.

A recent Bloomberg Law article calls out America’s shift to more efficient LED light bulbs as a model to replicate in addressing climate change. While this is an excellent recommendation, a few key points were omitted that need to be correctly identified and explained.

Industry Embrace of Improvement

Certainly, energy-efficiency improvements in lighting “have been an unqualified success,” as the article said, but that would not have happened without the lighting industry’s embrace of the Energy Independence and Security Act (EISA) of 2007 language that set the standards and plans to move light bulb efficiency forward in the 21st century.

Also, global lighting manufacturers (which include National Electrical Manufacturers Association members) have voluntarily funded hundreds of millions of dollars of research and development to enable LED technology to offset other technology types and transform the lighting market.

We need not look far to see the results of this R&D. LED technology benefits, including efficiency, have quickly overcome other lighting technology, and are transforming the market even without any Department of Energy (DOE) standards. Voluntary programs such as Environmental Protection Agency’s ENERGY STAR have been helping accelerate that transformation for over a decade.

Participation in DOE Rulemaking

Encouraged by technological innovation, energy efficiency savings, and voluntary programs mentioned above, consumers are voting with their pocketbooks, enabling LEDs to transform the market without mandatory government actions. Market transformations driven by innovation and voluntary programs such as ENERGY STAR are an example of successful “other than regulatory action,” to use a DOE term of art.

During rulemakings, DOE investigates what would happen in a given market and product class independent of federal minimum energy efficiency standards to estimate whether standards-setting would prove beneficial, harmful, or redundant.

Using the classic “carrot or stick” analogy, federal mandatory performance programs are decidedly in the “stick” category with their deadlines, forced obsolescence, and sales prohibitions. Transformational incentives and “other than regulatory actions” are “carrots,” less intrusive, and less expensive, and so are worth trying because they enable change at a lower cost.

NEMA members support the creation of fair, minimum efficiency lighting voluntary and mandatory standards to defend consumers from poor quality products. We have consistently commented in DOE proceedings to that effect and look forward to continuing our efforts in future rulemakings for LED lamps.

To claim that the DOE has failed to create more stringent lighting product standards and in so doing has disabled energy savings is to ignore the investments and accomplishments of the lighting industry and fails to recognize the incredible market transformations the lighting industry has accomplished and will continue to accomplish independent of DOE standards, thanks to LED technology and industry’s continued investments in further development.

The transformation of the global lighting market is well underway and needs no mandatory requirements to encourage it further. We agree with the article’s overall message: Technological innovations for LED lighting, spurred by research scientists and lighting manufacturers, embraced fully by consumers without regulatory mandates have been an unqualified success. And we agree that this example should be used by other industries so they can do their part by following the path illuminated by lighting manufacturers.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Author Information

Alex Boesenberg is the director of regulatory affairs for the National Electrical Manufacturers Association. He facilitates NEMA industry inputs and efforts concerning federal product performance regulations, including DOE appliance efficiency regulations, participation in the EPA’s ENERGY STAR programs, and NEMA member involvement in state level regulations.

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