Light Bulb Giants Hope U.N. Will Guarantee Their Market Share

Posted on Fri 02/24/2012 by

0


By Lachlan Markay ~

A pair of major light bulb manufacturers is teaming up with the United Nations in an attempt to pressure countries into participating in “a global transition” to more energy-efficient light bulbs. The two companies are both major manufacturers of the types of bulbs that would replace incandescents under the plan.

A presentation (linked to below) by Rudy Provoost and Martin Goetzeler, CEO of Philips and COO of OSRAM, respectively, calls on the UN’s Environmental Programme to “lead the engagement required with developing and emerging countries, governments and the private sector to achieve a global market transformation” to the types of bulbs that their two companies manufacture.

Those bulbs include compact fluorescent lamps (CFLs) and light-emitting diodes (LEDs). Both companies are seeing large portions of their growth in the LED market. LED sales accounted for 18 percent of Philips Lighting’s total sales in 2011. Twenty percent of OSRAM’s 2010 turnover came from its LED products, and CEO Wolfgang Dehen said the company would look to “increase this considerably by 2015.”

A partnership with the United Nations could certainly help advance that goal. With emerging economies adopting more advanced technologies, government-mandated footholds in developing nations would be a windfall for both companies.

And government action will be required, Provoost and Goetzeler claim. “Market forces are not sufficient to achieve the rapid transformation needed in the lighting market to respond to the climate change challenge,” they write. “Instead, a multi-stakeholder global partnership is required to support countries as they embark upon efficient lighting transformation programmes.”

“Global partnership” in this context means governments partnering with private companies to mandate or otherwise incentivize the products that those companies create.

“With its unparalleled global network,” Provoost and Goetzeler continue, “UNEP can provide leadership by inspiring and enabling nations to prioritise efficient lighting and reap the benefits of lowered energy costs.” Philips and OSRAM would of course reap their own benefits as well.

Philips and OSRAM are both part of the “en.lighten initiative,” an organization that promotes policies in developing countries that encourage or require the use of fluorescent and LED lighting products. The group is slated to release a full set of policy recommendations for leaders in developing countries, but their website offers a preview of their general policy approach:

Policy and regulation – offers practical information on the development of policy and regulatory approaches to promote efficient lighting. This section will include best practice examples of countries which have developed successful regulatory frameworks.

The transition to energy efficient light bulbs, in other words, requires policies and regulations that promote their use. It does not rely on market forces.

Philips and OSRAM’s strategy, then, is to use an international political organization to pressure developing countries into securing the two companies a lucrative market share for their products. LEDs and CFLs tend to me more expensive than incandescent bulbs, so consumers would not likely make the transition of their own accord.

So while the two light bulb companies will benefit economically, it’s not clear that the citizens of the countries they are targeting will. The companies tout the microeconomic benefits of more efficient light bulbs, but if consumers thought they were getting a better deal, government action wouldn’t be necessary – those consumers would choose to buy the more efficient bulbs.

About 2.5 billion people, almost entirely in developing nations, live on about $2.00 per day or less. They are the ones who will be most impacted by a rise in the costs of their daily expenses. Philips and OSRAM discuss their work as a boon for emerging economies, but they are pushing a program that, while enriching their own portfolios, would likely raise the living costs of some of the world’s most economically distressed populations.

Here is the flier from Philips and OSRAM promoting their U.N. “partnership”:

UN-lightbulbs

Lachlan Markay works to advance  The Heritage Foundation . http://www.heritage.org/  policy solutions by breaking hard-hitting investigative news stories as a reporter for the think tank’s Center for Media and Public Policy.

Read more informative articles at Heritage – The Foundry . http://blog.heritage.org/

About these ads