George W. Bush Reaches Into Your Home This Year (and That's a Good Thing)

The last three American presidents met to discuss super-secret energy efficiency requirements in 2010. How will their meeting affect you? Image Source: White House // Pete Souza

The Energy Independence and Security Act of 2007, signed into law by George W. Bush, called for a radical modernization of the nation's energy infrastructure. It was designed as a roadmap for funding and developing technologies in renewable fuels, more efficient buildings, and carbon capture and storage that could achieve efficiency targets for federal, commercial, and residential buildings and products. While updating and expanding the controversial Renewable Fuel Standard or setting energy consumption targets for commercial buildings enraged groups across the country citing the government's overreach, nothing compared to the uproar caused by a tiny section of the legislation that allowed the government to reach into every citizen's home.

While the government policy began invading homes in 2012, it couldn't penetrate every American household until the beginning of this year. Only 40% of you reading this even know about it, according to a recent poll. Worse yet, Uncle Sam will only expand his reach in the next several years. What's the controversial topic, you ask?

Light bulbs, of course.

The act calls for all screw-in light bulbs to use 25% less energy than their power-equivalent predecessors on a carefully orchestrated timetable. All 100-watt light bulbs were required to meet the new standard in 2012, while 75 W light bulbs followed in 2013. This year all 60 W and 40 W light bulbs, the most common light sources in North America, will need to become 25% more efficient. Since incandescent bulbs cannot meet the standard, the act essentially serves as a ban on their production.

While the new rules will greatly reduce the amount of energy consumed in the United States, especially considering the simplicity of the standards, not everyone is enthusiastic about the change. A survey conducted by Osram Sylvania, one of the world's largest lighting suppliers, found that 30% of consumers planned to hoard incandescent bulbs while they're still on store shelves. Are Americans justified in their act of defiance?   

It may be difficult to believe, but the issue of light bulb manufacturing has become a highly controversial and politicized topic. Are the promised gains in energy efficiency for American households real? Should Americans embrace more efficient light bulbs, such as CFLs and LEDs, or cling to their more familiar incandescent bulbs? Let's explore the history of innovation of the light bulb and analyze how much money modern lighting options could save your family -- and the country.

Tell me something I don't know about boring light bulbs.
Light bulbs have come a long way since Thomas Edison filed his first patent in 1879. The first carbon filament utilized uncoated cotton and lasted 14.5 hours, but upgrading to a bamboo filament just one year later, in 1880, allowed his light bulbs to last up to 1,200 hours. That enormous leap -- along with Edison's numerous inventions ranging from electric conduits to electric meters -- made light bulbs more practical for everyday use and marked the beginning of the end of kerosene lamps.

Edison's first light bulb model from 1879. Source: Wikimedia Commons / User:Alkivar

While increasing the lifetime of light bulbs was a major advancement, increasing their energy efficiency proved to be more difficult. By the 1950s scientists had still only managed to turn 10% of the energy reaching an incandescent bulb into light. It wasn't until the 1973 oil crisis that researchers created a more energy efficient fluorescent bulb for household use, although the bulbs didn't gain much market traction until the 1990s.

Why is the government telling you how to light your home?

It all comes down to efficiency. The Department of Energy estimated that Americans were using 971 million 60 W incandescent bulbs in 2010. Sure, improvements have been made, but the technology is surprisingly similar to Edison's bulbs from 130 years ago. If the technology that can enable greatly reduced energy consumption exists, why should our country use anything else?

America can also reap significant benefits in energy consumption for making the relatively simple switch. The DOE estimates that the more than 49 million LEDs installed across the country in 2012 save the nation approximately $675 million in energy costs for the year. Therefore, replacing every incandescent bulb in the country with a current generation LED bulb could save the country $13.5 billion in electricity costs every year. Fast forward 10 years to even more efficient LEDs (see below) and the savings swell even more.

Who benefits from the new, strict standards?
Several companies supplying metals used in new LED bulbs, or the bulbs themselves, also stand to benefit. Let's quantify the opportunity to really appreciate it. Consider that an estimated 1.1 billion incandescent bulbs were sold in North America in 2011, but that number is expected to drop to just 200 million this year, according to IMS Research. The number will fall further when Canada resumes its own light bulb efficiency standards.

Who stands to benefit the most? Perhaps the two easiest picks are chemical manufacturer Albemarle Corporation (NYSE: ALB  ) and LED bulb manufacturer Cree (NASDAQ: CREE  ) . Albemarle supplies high-purity metal organic products that are needed in the production of LED and OLED products, as well as other consumer products and even solar cells. While the segment is an important part of the company's business, LED technology is Cree's business. The company has taken full advantage of the government's new standards in 2012 by growing total revenue 40% in the past two years. Shares have nearly tripled over the same period, but a few disappointing quarters last year led to major collapses. Cree remains a volatile play in 2014 even with the end of the 60 W incandescent bulb.

Of course, everyone benefits from the new standards. Lighting your home makes up about 10% of your annual electricity costs. Switching out incandescent bulbs with energy efficient LEDs could drop lighting costs to just 2% of your overall electricity cost -- and the bulbs last up to 25 times longer. 

Source: energy.gov

Are LEDs the perfect bulb?
Not quite, but researchers have made some spectacular gains in recent years. LED bulb costs have dropped over 85% since 2008, while they are six to seven times more efficient, use 80% less energy, and can last 25 times longer than incandescent bulbs. Research sponsored by the DOE will allow LED bulbs sold in 2025 to be 87% more efficient than the most efficient variety sold today -- and 33% efficient overall.

What would the perfect light bulb look like? We can measure the efficiency of a light bulb by dividing the amount of light emitted by the power needed to produce the light. This metric is also called luminous efficacy and has units of lumen/watts, or lm/W. Take a look at how the three most common types of light bulbs stack up against the theoretical perfect light bulb.

Light Bulb Type

Power

Luminous Efficacy

Incandescent

60W-100W

15 lm/W

CFL

60W-100W equiv.

73 lm/W

LED

60W-100W equiv.

70-120 lm/W (average of 85 lm/W)

LED 2025

60W-100W equiv.

224 lm/W

Impossibly perfect light bulb

60W-100W

683 lm/W

Source: energy.gov

The shift in light bulb technology should also shift how consumers approach light bulb purchases. In the past, with incandescent bulbs, it made sense to buy lighting based on power (watts). A bulb with more power generally produced brighter light. That doesn't quite fly with CFL or LED bulbs, which can produce the same amount of light -- or more -- with a fraction of the power. Today, consumers should purchase light bulbs based on brightness, or the number of lumens.

Foolish bottom line

Despite being just a small piece of the Energy Independence and Security Act of 2007, the new light bulb standards will go a long way in reducing the nation's energy consumption. Not everyone is thrilled that the government wants to clamp down on incandescent bulb usage, but it seems awfully silly to use technology that dates back to Thomas Edison to light your WiFi-doused, HD-emboldened, smartphone-chirping home. It's also pretty wasteful. While LED bulbs do cost a little more upfront, they more than make up for their price tag with energy savings and greatly extended lifetimes. If every American made the switch to LEDs the country would save $13.5 billion each year. Do your part and install LED bulbs in your home. And thank George W. Bush while you're at it. 

Save money with LED bulbs, then invest it with Warren Buffett
You can watch your savings pile up after you make the switch to LED bulbs. At the same time America is pushing to consume less energy, it's also producing more. Sounds like the perfect way to invest your savings. Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!


Read/Post Comments (17) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 27, 2014, at 11:59 AM, Gaolin wrote:

    If manipulating the market is a legitimate function of government because individuals are incapable of making the supposedly rational choice for themselves, what is the point of an article dedicated to convincing readers that the mandated phase-out of incandescent bulbs is sensible?

  • Report this Comment On January 27, 2014, at 5:52 PM, CBD1960 wrote:

    The cost of the new light bulbs is never factored in - way over the cost of an incandescent bulb - nor are they lasting as long as projected; I know because I've got some installed around my house. Per LED light bulb it's costing me more in dollars and is not made up for in my electric bill.

  • Report this Comment On January 27, 2014, at 6:13 PM, RobertC314 wrote:

    It's worth noting that, while 683 lm/W is 100% "efficient", if you want a "white" light source the limit of what is possible is likely closer to 300 lm/W which makes the 2025 number a bit more impressive.

    CBD1960 also makes a good point on the cost 2 ways: Bulb replacement and environmental.

    Compact Florescents have significantly longer life than regular bulbs when used in long-cycle applications, but their life is significantly shortened when they are turned on and off quickly (for example, in a bathroom, closet, etc.). They also contain mercury which, I'm told, isn't exactly environmentally friendly.

    LED bulbs are better in that they last even longer - for practical purposes, LEDs themselves don't burn out, it's generally the electronics driving the LED that fail (CBD, I would recommend a different brand if they are burning out repeatedly). They also don't contain mercury. They do, however, contain electronics and other metals that should really be recycled. Their biggest drawback, however, is that they cost a LOT more than either other option (about 10x more the last time I was buying bulbs). They're definitely the right direction to go, but I'm not sure that we are to the point that we should be banning regular incandescent bulbs. Thoughts?

  • Report this Comment On January 27, 2014, at 7:34 PM, g35craig wrote:

    Here in Canada the winter days are short and temperatures are cool. When lights are on, mostly in winter, old fashioned incandescent bulbs provide about 90% of their energy as renewable electric indoor heat. This energy is not wasted.

    That said, I use LED's for out door lights and in rooms that I don't need or want the heat. I cannot find an efficient bulb to replace the 25 and 40 Watt bulbs in my circa 1900 vintage light fixtures; LED's and CFD's are hideous!

  • Report this Comment On January 27, 2014, at 9:04 PM, jkenyan wrote:

    2 comments.

    I have had two LED's burn out in less than 4 months. So much for 25 years.

    While the color of the light is an improvement over CFL's, it is STILL not warm and bright like incandescents.

  • Report this Comment On January 27, 2014, at 10:09 PM, wamassoc wrote:

    If it makes so much sense to switch to LED's and CFD's from an economic standpoint, make that point to the consumer and let them sell themselves. The government should not be dictating what kind of appliances, lights or other electric gear we use. It seems to be a matter of control. We are too stupid to make the right choices, so the government will do it for us!

  • Report this Comment On January 27, 2014, at 10:32 PM, bbell46356 wrote:

    I agree with wamassoc. If CFLs and LEDs were that great, the government would not have to make a law requiring Americans to buy them. That said, although you can save energy there are some applications where the traditional incandescent bulb is the best choice - specifically applications where you either need the heat or don't use the light very often. I can also verify that at least for CFLs they really don't last anywhere close to as long as advertised and I have tried 4 or 5 brands including the big names like Phillips and GE. This is another case of government welfare/crony capitalism.

  • Report this Comment On January 28, 2014, at 1:45 AM, dgmennie wrote:

    The full court press to ban incandescent filament lamps may be seriously flawed from other perspectives not addressed in this article.

    First, there is the extreme simplicity of incandescents relative to anything else. They have only two failure modes: filament burnout or a broken/cracked glass envelope (which leads to almost instantaneous filament burnout). And they operate properly and dependably at all ambient temperatures amenable to human activity. CFLs often do not work well when cold, putting out little light when firtst turned on. They must "warm up" for periods of seconds, even minutes, before reaching operating temperature and providing full output.

    Also, any type of discharge lamp has multiple internal elements plus some kind of power supply. There is a small but very real failure rate associated with every such component (igniter, anode/cathode, gas fill, phosphor, inductor, capacitor, solid-state device, and each interconnection/wire bond) deployed to create what one might call a lighting system rather than simply a lamp. Perhaps there are ten components per CFL, each a potential source of failure. And if you turn the CFL on and off frequently, failures can get much worse than the tens of thousands of hours frequently quoted.

    Now, when you consider that practical, commercially-available CFLs must be mass produced at the lowest possible cost, the opportunity for increased component-level failure rates could become significant. If this happens, and should the average CFL lifetime ever drop anywhere near the all-too-short life of the incandescent, a real political problem may develop. Consumers will not be happy paying (say $5.00) for something that once set them back only 50 cents, especially if Government edicts give them no choice. (I expect they then won’t be much interested in a lifetime energy analysis discussion.)

    There is also the issue of light quality. Some seeing activities may not adapt well if deprived of incandescent light. I have no figures or studies to quote you on this, but that's the impression I get from the commentary I have read on general lighting and the importance of color rendering. The light from a CFL is not full spectrum, having its light output concentrated at only a few frequencies over the entire visible band.

    LEDs should also be considered a lighting system with their inherent reliability and, ultimately, usefulness tied to component count and the operating environment. Cost and heat dissipation issues seem to be the limiting factors for LED deployment thus far, although this may well be transitory.

  • Report this Comment On January 28, 2014, at 8:43 AM, SeminoleJet wrote:

    GEORGE W BUSH DID NOT HAVE ANYTHING TO DO WITH MAKING ANY WORTHWHILE STATEMENT ABOUT ANY SUBJECT AT ANY TIME.

  • Report this Comment On January 28, 2014, at 8:54 AM, onwardupward wrote:

    The Federal Government needs to get focused on minding its own business (See US Constitution for details). Picking winners and losers in the light bulb market space is crony capitalism.

  • Report this Comment On January 28, 2014, at 12:35 PM, knowfool wrote:

    Thanks to those who provided the CFL and LED technical info. As with the Unaffordable Care Act, it's all about control.

  • Report this Comment On January 28, 2014, at 12:59 PM, TMFBlacknGold wrote:

    All,

    "If CFLs and LEDs were that great the government would not have to make a law requiring Americans to buy them."

    That isn't necessarily true. Would consumers really make the switch on their own if cheaper -- but less efficient and outdated -- options existed? The poll by Sylvania points to flaws in that thinking, but there are numerous examples to demonstrate that consumers don't jump on the efficiency bandwagon if they don't see the relevance to their lives. "Save 85% of the energy on 10% of my electric bill? Eh, so what." And that's only if they are aware of the numbers.

    The key here is that increasing the efficiency of each household adds up across the population. In fact, reducing the nation's energy consumption by one-third is possible by implementing simple efficiency standards on a large scale, as recent studies show. One such benefit would be that older, dirtier power generation plants could be retired and replaced by newer, cleaner renewable sources. Reducing the denominator (overall energy consumption) is the quickest way to increase the contributions of renewable sources (the numerator).

    Or think about reducing the nation's fuel consumption. The best way to do that is to mandate that auto manufacturers continue to improve the efficiencies of their fleets. Would large quantities of people buy more efficient vehicles to save fuel and money over the long run without the CAFE standards? Likely not. But when the government regulates something to foster a positive trend and the beneficial externalities that come with it, the nation as a whole can reap the rewards.

    Maxxwell

  • Report this Comment On January 28, 2014, at 5:09 PM, bbell46356 wrote:

    Maxxwell,

    I disagree. People are smarter than the government or the "I know better than you" crowd gives them credit for, especially when it comes to their wallets.

    I the case of the lightbulb, it is an exceedingly simple calculation: Can I save enough money over the life of the build to offset the higher upfront cost?

    The problem with CFLs is the answer is maybe. ACFL uses 13 watts to light equivalent to a 60 watt traditional bulb, so you save 47 watts or 0.047 kilowatts. Over a thousand hours you save 47 kilowatt hours which if you are paying $0.10 per kwhour is $4.70, about the extra you pay for the bulb. The bulb is supposed to last 7000 hours so in theory you should save a ton. That's why I have purchased quite a few. That is why I am a little disappointed when they don't last 1000 hours. The stores have been pretty good about replacing the bulbs under warranty, but you have to keep your receipts, kind of a pain for a $5 item that should last 5 to 10 years in a typical application.

  • Report this Comment On January 28, 2014, at 5:12 PM, bbell46356 wrote:

    Government doesn't have to get involved. Take the car example - sales of fuel efficient cars spike and SUVs plunge every time gas prices spike.

    Even if you believe it is in the national interest to promote CFL bulbs, there are far less intrusive ways to do it besides a ban on incandescent bulbs.

    A surtax on incandescent bulbs for example.

  • Report this Comment On January 28, 2014, at 5:37 PM, TMFBlacknGold wrote:

    @bbell46356

    "Government doesn't have to get involved. Take the car example - sales of fuel efficient cars spike and SUVs plunge every time gas prices spike."

    If we wait for energy scares to make strides in improving energy efficiency there wouldn't be enough time to respond or insulate the damage. Why should we only act during a crisis?

    "Even if you believe it is in the national interest to promote CFL bulbs, there are far less intrusive ways to do it besides a ban on incandescent bulbs."

    The new standards aren't technically a ban on incandescent bulbs, but rather a very high bar that the technology cannot meet. CAFE standards essentially work in the same manner; banning less efficient cars over time.

    Maxxwell

  • Report this Comment On January 30, 2014, at 12:22 PM, TMFBlacknGold wrote:

    Timely...

    "New energy efficiency standards for metal halide lamp fixtures, which are used in lighting for big box stores and parking lots, will, over 30 years, help reduce harmful carbon pollution by up to 28 million metric tons – equivalent to the annual electricity use of 3.9 million homes – and save consumers more than $1.1 billion on their energy bills."

    http://energy.gov/articles/new-energy-efficiency-standards-m...

    Maxxwell

  • Report this Comment On April 03, 2014, at 2:53 AM, thidmark wrote:

    I don't understand how throwing mercury into the ground can be considered a sensible alternative.

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