It's not official. But China appears to be the first developing country that will do away with the traditional incandescent light bulb.
Chief Executive Officer for the Global Environment Facility Monique Barbut told Reuters news agency this week that her organization is starting a global campaign to ban all inefficient light bulbs and said China has agreed to join.
China is expected to officially announce its participation in December, according to the media outlet, which also said the country's transition away from the inefficient lighting will be made in the next 10 years.
The move comes after Australia in February banned the bulb and California began considering a similar measure. And after Wal-Mart this week announced it already reached its goal of selling 100 million energy-efficient fluorescent bulbs this year.
The maneuvers also help brighten the adoption rates of alternative bulbs including compact fluorescent bulbs and light-emitting diodes (LEDs). And traditional big name lighting companies are already feeling the pressure.
General Electric (NYSE: GE) said Thursday it will cut 1,400 hundred jobs from its lighting division and shut down plants in Brazil and the United States. The industry giant explained the restructuring is meant to help the company respond to global energy-efficient demands by increasing its high-tech lighting offerings.
GE's appetite for such lighting technology has spurred Wall Street rumors that the company will satisfy some of its hunger with an acquisition, specifically by buying LED-maker Cree (NSDQ: CREE).
But Cree has had a rough week. The Durham, N.C.-based company's stock took a 11.5 percent nosedive Wednesday after a Canaccord Adams analyst predicted the company will miss December expectations. The news drove shares down $3.75 to $28.97.
Greentech Media met with Cree's CEO Chuck Swoboda to talk about whether global interest will drive the lighting market, as well as his response to company shares plummeting.
Q: Competition in energy-efficiency lighting is heating up. How do you see the lighting industry changing?
A: Fundamentally the real competitors today are the light bulb companies. And they want to sell you a light bulb, and they want to sell you that light bulb over and over and over. That model is going to go away because we are going to sell you a light source that is going to have a lifetime of 10, 20 years, not six months.
Q: How much of a role will policy initiatives, like Australia's light bulb ban, play in LED's adoption?
A: I think awareness is changing because of all the policy initiatives. One of those by itself doesn't drive it. But it does drive awareness.
Q: Do you think subsidies would help drive growth?
A: Are subsidies good? Sure. But we don't think LEDs require subsidies to make the business case today. There are examples where you can cost justify LED lighting against most conventional technologies, especially in the outdoor applications where lighting is on a large portion of the day. Think about parking garages, [24/7] operations. We can already drive a payback cost today in terms of energy and maintenance savings.
Q: What challenges still face LED lighting?
A: I think the technology is coming. There is clearly an upfront cost you have to pay to do this. But obviously as LEDs get brighter, then the number of LEDs required make the fixtures get cheaper and also makes the payback go up because the energy efficiency is better. I think the challenge is that we have to build scale, whether that be management scale, manufacturing scale on a global bases, or even scale of channels to drive this technology into the market.
Q: What role will lighting play in reducing climate change, especially in China?
A: We've got to find new sources and cleaner sources of energy. But we could flat out reduce the consumption. What's interesting is that this concept is driven at the highest levels in places like China, where they can't grow their economy. They have to have LED lighting because there is not enough energy to keep going down this road the way they are going.
Q: As you know, a Canaccord Adams wrote in a note to investors this week that Cree will miss December expectations due to customer losses in its core business. Is there any truth to the claim?
A: Cree actually doesn't have any December expectations, so I'm not sure how we could miss them since there aren't any. That being said, there is going to be speculation and differences of opinion.
Q: Well, are you experiencing any customer loss?
A: We have an earnings call on October 18th where our results will be reported and they will speak for themselves.
Q: How about those rumors that GE wants to acquire Cree?
A: That's someone else's speculation. We clearly cannot and do not want to comment about that.
Q: At the end of the day how will energy-efficient technologies pan out against renewable energy technologies?
A: It's frankly cheaper to save energy than, sometimes, it is to find a new source. And we have to do both. But we can do one now.