Government Subsidies of CFLs and Planned Obsolescence

From the forum:
I do wonder about their performance claims, however. If it were so easy to make incandescents hit into mid double-digit efficiency, why didn’t the manufacturers do this in order to evade the “incandescent ban” of a few years ago?

I can answer that 🙂

The History of Light Bulb Manufacturing and Planned Obsolescence

There were many light bulb manufacturers at the turn of the 20th century, each competing to make a better, longer-lasting bulb. Eventually, bulbs became so long-lasting that sales fell off when they didn’t need to be replaced as often. Enter planned obsolescence…

“…early light bulb innovators like Thomas Edison and Adolphe Chaillet had always pushed for products with the utmost longevity. So decades-lasting light bulbs existed in the early 20th century… Where did our ability to make long-lasting light bulbs go? Enter the Phoebus cartel. Established in the 1920s, light bulb manufacturers like Philips, General Electric, Osram and others across the globe decided to collude in the light bulb market. As technological advances improved and pushed out the life span of incandescent bulbs, sales volumes would be negatively impacted. Fewer, infrequently burnt out bulbs meant less need for replacements – less demand for their products. While price fixing was a natural result of cooperation in an imperfectly competitive market, the Phoebus cartel strived to do more than hike prices. They went beyond limiting product innovation – over the gradual course of a few years, manufacturers actively lower the life span of light bulbs. The industry standard of 2,500 hours in 1924 would eventually drop to 1,000 hours by 1940. Light bulbs were deliberately made more fragile, and competitors would be closely monitored (and if necessary, fined) to ensure strict adherence to product degradation. The Phoebus cartel would eventually dissolve due to increased external competition and the disruptions of World War II, but it had successfully demonstrated a very important point. Stifling innovation and product quality was a feasible means of sustaining consistent consumption and profits.”

(2) planned obsolescence and light bulbs:

Even with this, for decades, light bulb manufacturers were looking for ways to make more money on the Edison light bulb and they found it with the invention of the compact fluorescent light bulb. Now, all they had to do was get people to buy them…

“The 2007 Energy Bill, a stew of regulations and subsidies, set mandatory efficiency standards for most light bulbs. Any bulbs that couldn’t produce a given brightness at the specified energy input would be illegal. That meant the 25-cent bulbs most Americans used in nearly every socket of their home would be outlawed.

People often assume green regulations like this represent the triumph of environmental activists trying to save the plant. That’s rarely the case, and it wasn’t here. Light bulb manufacturers whole-heartedly supported the efficiency standards. General Electric, Sylvania and Philips — the three companies that dominated the bulb industry — all backed the 2007 rule, while opposing proposals to explicitly outlaw incandescent technology (thus leaving the door open for high-efficiency incandescents).

This wasn’t a case of an industry getting on board with an inevitable regulation in order to tweak it. The lighting industry was the main reason the legislation was moving. As the New York Times reported in 2011, “Philips formed a coalition with environmental groups including the Natural Resources Defense Council to push for higher standards.”

Industry support for the regulations struck lawmakers and journalists as a ringing endorsement of the regulations. Republican Congressmen Fred Upton, who has since flip-flopped and attacked the regulations, cosponsored the light bulb provision in 2007. His excuse, according to conservatives I spoke to: It couldn’t be that bad if the industry supported it.

Liberals used this very argument to ridicule Republicans’ 2011 efforts to repeal the law. Democratic congressman Steny Hoyer defended the rule by saying, “The standards are supported by the lightbulb industry.”

Joe Romm at the Center for American Progress pinned repeal efforts on the “extremist Tea Party wing of the party, which opposes all government standards, even ones that the lightbulb industry itself wants.”


Workers at the GE manufacturing plant in Winchester, Virginia understood this when they were laid off in 2010:

GE supported the regulations. Many Winchester workers, noting that the CFLs are made in China by lower-wage workers, say GE wanted to force the higher profit-margin bulbs on consumers, and Winchester is collateral damage.


Government Subsidies of CFLs

So, the bottom line is… Light bulb manufacturers make more money from CFLs. Even though the price has come down in your local store, the shelf price does not reflect the true cost of the bulbs as they are being subsidized by the government and the money goes directly to the manufacturer. For instance California State government subsidies of CFLs:

Jan. 19, 2011 12:01 a.m. ET California’s utilities are spending $548 million over seven years to subsidize consumer purchases of compact fluorescent lamps…


Eventually, after the light bulb “ban” goes totally into effect the subsidies will be removed as they will no longer be needed and the price of a CFL will go up again. This is what happened in Australia. Before incandescent bulbs were banned in Australia, CFLs were typically $1.50 per bulb. As the subsidies are being taken away, the price has now risen to $8 per bulb and is still rising. Predictions are that it will stop at about $12 per bulb.

Paul Wheaton‘s video Light Bulbs, Mr Stinkypants and the CFL where he talks about the CFL subsidies: