How Wal-Mart and the government are killing the incandescent light bulb.

Commentary about business and finance.
Oct. 6 2007 6:53 AM

Edison's Dimming Bulbs

How Wal-Mart and the government are killing the incandescent light bulb.

Light bulb. Click image to expand.
Is the incandescent light bulb on its way out?

Compact fluorescent bulbs cost more than regular incandescent bulbs. But according to the U.S. Department of Energy, they last up to 10 times longer, use about one-fourth the energy, and produce 90 percent less heat. Over its life span of four and a half years, a CFL more than repays its higher cost in energy savings: $62.95 per light bulb. Oh, and they're good for the planet, since they produce fewer emissions. But while they've grown in popularity, CFLs have yet to emerge as a household staple, in part because consumers can't see beyond the shock of the sticker price to the long-term savings. "When you buy a compact fluorescent bulb at the cash register, you experience the higher cost vividly and all at once," says Robert Frank, a Cornell economist and author of The Economic Naturalist. "But when your electric bill goes down as a result, the savings are not as evident." Consumers routinely make such short-term economically irrational decisions.

As it aims to vanquish Thomas Edison's filament bulb—and save the Earth—the CFL is running into the brick wall of human nature. But the CFL is getting a lift from two of the globe's most powerful forces: image-conscious Western governments and Wal-Mart.

With its $346 billion in annual sales and 100 million customers, Wal-Mart is the carrot. In 2006, eager to improve its image as a low-wage emporium of Chinese imports, Wal-Mart pledged to sell 100 million CFLs this year. The megaretailer stacked CFLs front and center, hammered out deals with suppliers like General Electric, and enticed customers the only way it knew how: by appealing to their desire to save money. According to a calculator on Wal-Mart's Web site, replacing 30 incandescent bulbs with CFLs can save more than $1,000 over the life of the bulbs—real money for a Wal-Mart shopper. At Wal-Mart, CFLs are cheap: A six-pack of 26-watt GE CFL bulbs goes for $15.16. And they're getting cheaper. In September, Wal-Mart introduced a cheaper private-label CFL that undercuts name brands.

The stick has been the specter of government regulation. Around the globe, environmentalism and global warming are hot topics among politicians. "People are in a bidding war to see who can fight climate change the most," said Dr. Matt Prescott, director of Ban the Bulb, an Oxford, England-based organization. Earlier this year, Australia announced that it intends to phase out incandescent bulbs by 2010. The 27-nation European Union, whose 493 million citizens make it a powerful consumer juggernaut, piously followed. Sort of. In March, a summit of European leaders asked the European Commission to develop tough new requirements applying to incandescent bulbs and household lighting by 2009. But German Chancellor Angela Merkel stepped on her lines. "Most of the light bulbs in my flat are energy-saving bulbs," she said. "They're not yet quite bright enough. When I'm looking for something I've dropped on the carpet, I have a bit of a problem." In August, the EC decided to maintain tariffs on Chinese-made CFLs.

Business-friendly England is seeking a middle ground. Last month, Secretary of State for the Environment Hilary Benn announced a deal struck with retailers and utilities calling for a voluntary phaseout of the incandescent bulb by 2011. And now both houses of the U.S. Congress are considering laws that would create new standards for light bulbs that would effectively consign Edison's invention to time capsules starting in 2012.

While no incandescent-bulb death-penalty law has been passed, the legacy light seems on the way to its extinction. "It's time for the technology to die," said Lowell Ungar, director of policy at the Washington-based Alliance to Save Energy, striking a Schwarzeneggerian tone. (Schwarzenegger's current domain, California, is considering a ban on sales.)

CFLs appear destined to become a consumer staple, either because hordes of people realize they're cheaper or because the alternative will be prohibited. My money's on the carrot. Thus far, green goods have been pitched to the top: expensive Priuses for guilty yuppies, solar installations for rich techies. But to have real impact, energy-efficiency products need to make economic sense to those who congregate on the lower rungs of the economic ladder. Wal-Mart's sales of CFLs prove that energy-efficient goods don't have to be luxury items. And its success at selling them—the company last week announced it surpassed the 100 million bulb goal—is spurring manufacturers like General Electric to shut down incandescent-bulb factories.

Earth lovers fret that even if the United States and Europe get their greenhouses in order, the large populations in China, India, and Africa will ultimately overwhelm any emissions savings as they plug in. But if CFLs became a staple at Wal-Mart and other low-end retailers, and if manufacturers respond to new regulations by producing massive quantities of CFLs at low prices, the first bulbs to illuminate Indian villages may be low-emission fluorescents. It takes more than one market force to change a light bulb.

This article also appears in the Oct. 15 issue of Newsweek.



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