Business Perspectives

Paul Walitsky
Philips Lighting Company

We want to talk about the ways in which lighting can be used to balance the dichotomy between environmental protection and sustainable development.

We are a subscriber to the ICC charter on sustainable development, and we believe that our products and policies can truly make things better. I would like to explain some of the basics of the electric lighting industry and our perspective. Also to say that we have been working with the World Bank in Poland on an energy-efficient lighting project, in Jamaica, and also in Mexico, a project in Mexico City and Guadalajara.

Because we all use lamps every day -- this room has got over a hundred, actually -- and electricity is so accessible, it is easy to overlook how much energy is used in lighting and the environmental consequences of that usage. We have to keep in mind that electricity is a secondary form of energy, and that primary energy used to generate electric is greater by a factor of three. Even so, in the United States electricity amounts to a growing fraction of energy demand.

Lighting is a significant user of electric energy. In a standard commercial building about 40 percent is used for lighting. That is before the Green Lights update. If you factor in the consumer usage, the residential, you get about 20 to 25 percent of the energy in the United States is used for lighting. That is a significant number. Therefore, the potential for savings is large.

The other savings you get besides the direct usage for lighting is, you reduce the heat load in the building, because lights generate heat, and then you need more air conditioning to carry away that heat. Therefore, the lighting has a direct impact on the environment.

We know that if we look at things like compact fluorescents, an 18-watt, can replace a 75-watt incandescent. In that case, you save 570,000 watt hours of electricity, or a million and a half watt hours of primary energy. This reduces the CO2 by a significant amount, and also the sulfur, nitrogen dioxide, and other things that might come out of coal, because coal is still more than half the power in the United States.

The lighting industry has been trying to get more and more energy-efficient lighting in place. The compact fluorescents, which were developed in the early 1980s are now starting to slow the growth of incandescent lighting.

One of our power suppliers in Wisconsin tells us that he is putting in compact fluorescents wherever he can by subsidizing the use of those by his consumers. This trend has slowed down in the last year or two. In New York City, Con Ed for a while was subsidizing that but is no longer. It seems to have dropped by the wayside.

Now, other energy improvements that we have looked at -- and it is a long history. The fluorescent lamp, the standard linear lamp, was developed in 1938, and it had a 25 lumens per watt output at that time. Current fluorescents are now at a hundred lumens to watt. The metal halide lamp which is used in street lighting and parking lots and stadiums started out at 65 lumens per watt, and it is now at a hundred. High-pressure sodium, which was developed in the 1960s at 90 lumens per watt, is now near 130 lumens per watt. These kinds of savings mean less lighting fixtures, they mean less energy generated from the power plants. So these are the kinds of things, the trend, of the lighting industry.

The important problem with all of these fluorescents is metal halides and mercury. People raise the issue of mercury content in the lamps. What we have seen if we look at a life cycle analysis is that the mercury in the energy-efficient lamps is a good investment, because it reduces coal burning, and coal contains mercury, which goes into the atmosphere. About a factor of two to four times as much mercury is saved in the standard fluorescent lamp, when you put that in the ceiling and replace incandescent lighting.

Even with this positive balance to the mercury cycle, the industry is still moving to reduce mercury content. This data has been published in the Federal Register; it is industry-wide data of the three major fluorescent lamp manufacturers in the United States combined.

In 1985, we had the four-foot inch and a half lamp that had 48 mgs of mercury. In 1990, it was down to 41, and the end of last December, the industry average was 22.8. So in just about ten years, we have cut the mercury content of the standard four- foot lamp in half, more than half, actually.

Now in June of this year, Philips announced a new development in the trend to lower mercury. We announced a lamp that we call Alto, which is now less than one-third of the industry average from last December. The Alto series of lamps in this case will have significantly less than ten mgs of mercury. The announcement was made in June. We started production the week before Thanksgiving, so that we are now getting these lamps out to the warehouses, and we will start delivering low mercury lamps within the next week or two.

This is a major breakthrough. This lamp now is in the single digits of mercury and reduces the mercury load, but it also changes the equation of how much mercury is saved by putting fluorescent lamps into the ceiling.

It will come out in the 34-watt lamp, which is a six-watt reduction from the standard 40-watt; it is the econo-watt version. We will gradually introduce this low-mercury feature throughout the line, so that at the end of 1996, just about all of Philips' production will be at low mercury. Since we are the largest lighting manufacturer in the world, this makes a significant reduction in the mercury load and lighting.

Now, we have pushed the mercury reduction and the wattage reduction by being active participants in Green Lights. We are a partner and an ally with EPA. We have made the Green Lights program a cornerstone of our marketing effort, and have been trying to find new customers for EPA to sign up. So the Green Lights effort, which is an effort to change the lighting in the United States, energy-efficient lighting, finds an ally in Somerset. We have in fact done our own factories and our own warehouses. We will finish up the last one early in 1996.

One of our facilities indicated in the first month of doing this, a reduction in the bill of $8,000. That is why energy efficiency pays, because it reduces the dollars that people pay out in electrical bills. Therefore, that money is now available to do other things. On the global scale or on the national scale, if you have energy-efficient lighting, that money now becomes available to build roads and hospitals and other things that are not needed to build power plants.

The Green Lights and Energy Star are voluntary programs. But the Energy Policy Act, which was passed in 1990 in the United States, is not a voluntary program. It eliminated the 40-watt standard cool watt lamp as of this past October. October 31 of this year was the last production date for any lamps manufactured in the United States at a 40-watt size. So the 34-watt that we talked about and the low mercury becomes the standard lamp. That is why we put the low mercury in it, because it will be the standard lamp. The eight-foot lamps were eliminated last April, and they now are also an econo-watt type version.

The real energy saving is to go to 32 watts instead of 34 watts, and go to a T-8 lamp, which is one inch in diameter instead of an inch and a half. What this also runs on is an electronic ballast, and there is an additional wattage savings in the electronic ballast. So you can get a 40 percent change in electrical efficiency by going to the T-8 with electronic ballast. This is why Green Lights pays. When you go from standard T-12s with magnetic ballast to a T-8 with electronic ballast, you can reduce your energy cost by 40 percent.

In states where the electrical bill is over five cents per kilowatt hour, Green Lights is a very good investment, just from the purely economic standpoint, not being concerned about CO2 emissions or the other things you save, just on pure economy. In those states where electrical rates are three and four cents an hour, then the payback is not what industry looks for. But you can appeal to the environmental side of it, and still push Green Lights. We did our own factory in Salina, Kansas, where electric rates are three and a half cents. It was not a particularly good investment from an economic standpoint, but we did it because we are a Green Lights partner, and we wanted to get it done.

As part of this, I will mention about new technology that Dr. Edmonds mentioned this morning before lunch. One of the new technologies which is just coming out is the T-5. It won't fit in existing fixtures. It is a metric size, with less glass, less metal, less packaging, more lamps in the truck, so that we get lamps to the warehouse and to the customers with less tailpipe emissions, and it is actually more efficient at the end of a thousand hours than the T-8, which is just starting to grow. We are designing fixtures for the T-5 which are going to be lighter and smaller than the fixtures for the T-8s, so the ceiling structures don't have to be as heavy or as strong. The T-5 is a new technology. Five years from now, you will see more and more fixtures in the T-5 range. That is where technology will take us.

The other concern is the tradeoff between life and efficiency. This lamp, an induction lamp, has no electrode and no filament and is called the QO lamp. It has a radio frequency field which excites the mercury, which excites the phosphor. This lamp is rated at 60,000 hours. Nobody knows how long that lamp is going to last, because nobody has tested it that long yet. Our theory is that the electronics will burn out before the lamp, but it is a perfect application for tops of buildings, for atriums, for things where nobody ever wants to change a light bulb again. It would be beyond our lifetime. They do sell for a couple of hundred dollars, but the maintenance savings and the replacement savings are there. Right now, it is in two wattages, 85 watt and 55 watt.

The other part of the system of lighting are the ballasts. I mentioned these electronic ballasts. There are also hybrid magnetic and electromechanical ballasts which are more efficient than before. Lighting is a system, and you have to look at that at both the ballast and the lamp. In that regard, lighting moves on to new technologies, new things being developed.

We are not the only one that will have the low-mercury lamp. Eventually, our friends at GE and Sylvania will have the same thing.

As a worldwide corporation, and the largest lighting company in the world and one of the largest electronics companies, we have an environmental policy. I want to review that policy. This has been endorsed by the chairman of the board and the presidents of all the constituent companies. Our principles are; sustainable development in the right place, prevention is better than the cure, and the total effect on the environment is what we care about in our products. And, of course, open contact with the authorities.

The policy comes down to eight statements. We are committed to environmental care in all of our operations. We recognize the importance of an ongoing involvement with management and all its employees. We do believe in life cycle assessment, the total assessment of the product, maybe because we are European-based, and are farther along in Europe than it is here. We are a supporter of the business charter for sustainable development, and that is why we are one of the sponsors of this conference. We are committed to complying with all the environmental laws, but we think we need a harmonization throughout the world. We see even in the United States, some states want one thing, some states want another. If a state is more lax than another, then it becomes a dumping ground for those things that the more stringent state doesn't want dumped in its state.

The last two from our perspective are that we encourage recycling of our products throughout the world. There is a growing recycling industry in the United States for light bulbs, and we support that industry. We have a recycling center in Europe that recycles TVs and takes apart electronic gear, those types of things. We do produce environmental type brochures that list all the ingredients in the lamps and in the products that we make.

That is our perspective on where technology can take us in the lighting field. Because lighting is a major part of the electrical load, we think it is one that needs attention. We think it is one that every company ought to pay attention to, and change its own light bulbs, an idea that even the UN is now looking at.

These are practical aspects. These are things which can lower your organization's electric bill. When you go back to your own places, look at your ceiling and see what you've got, and see how you can make your own contribution to the climate change problem.

DR. FOX-PRZEWORSKI: Thanks. Just to give you a footnote on that, the governments have requested that UNEP institute within the UN environmental good housekeeping. Indeed, the UNEP office in New York, which has not been renovated in 20 years, is using the occasion to do a green retrofit in a building that is not ours, by the way. So it has particular constraints that are interesting. There will be a resolution within the General Assembly requesting that this effort be multiplied and replicated throughout the UN system. So we do look forward to carrying through some of the work that others from your own organizations have done in green planning and also in green lighting as well. Thank you.

John Shlaes
Global Climate Coalition

I wanted to compliment Paul Walitsky of Phillips Lighting Company on his presentation, and I wanted to point out that virtually all of U.S. industry has been involved for many years in a wide range of environmental programs.

Estimates have been developed by some of our companies that about 25 percent of U.S. electricity is used for lighting. If you could replace all the lighting with modern lamps, you would probably reduce electricity use by about 12 1/2 percent. There is a major effort going on in that area, and I think there are over a thousand members or participants in the Green Lights Program which the U.S. EPA is sponsoring. Our members, basically U.S. companies, invest over $100 billion a year in the environment, and our companies are very active internationally as well. For instance, the chemical industry has developed an effective responsible care program, and the petroleum industry has been very aggressive. The utility industry is one of the leaders of the voluntary programs in the United States.

I would like to raise a caution regarding some other comments today. I don't think we can paint this issue in terms of good folks and bad folks, right folks and wrong folks. This is a very complicated international issue. How we deal with the climate issue has serious implications for the future of the United States economy and economies around the world. We must evaluate the impacts of any decisions we make related to the Climate Change issue based on how it is going to affect our livelihood, and our ability to drive our economy.

I am going to talk about the U.S. and linkages of our economy to other economies throughout the world.

The GCC, which I represent, is a leading business voice on climate change, and is a broad-based organization of over 55 business and trade associations and companies representing virtually all sectors of U.S. industry, including utilities, coal, paper, automobile, cement, railroad, oil, steel, aluminum, chemical and others. We represent virtually all of U.S. manufacturing, and our members comprise almost 40 percent of the U.S. economy. We were established in 1989. We have been active on this issue in the INC negotiations. We were a lead voice in Rio. Because it is an important issue, there is a lot of activity and debate, and I think we have to increase the understanding of the implications of proposals related to this issue as we try to make decisions.

We have worked very aggressively with the U.S. government in terms of promoting U.S. technology and know-how overseas and in the development of the Climate Change Action Plan. We have worked with the Departments of Energy, Commerce, the White House and other federal agencies to promote the development of U.S. exports of energy and environmental technologies. Many of our industries invest in alternative energy sources. It takes a great deal of capital investment, and they are trying to develop those. But you must have a receptive market, and you must have an infrastructure not only for alternative energy sources, but for other energy sources that are available to you at a reasonable cost.

The issue has obviously taken on a new characteristic. With the cessation of the Cold War, countries are placing much more emphasis on the economic and social issues in relation to developing world-wide and regional strategies. The UN has increased its clout, and is attempting to increase its role, which has expanded dramatically, especially on social and economic issues. They are aggressively involved in the climate issue through the Framework Convention on Climate Change Secretariat, and most of their affiliated agencies. Therefore they have a lot of influence on this issue, and we need to pay a lot of attention to the UN and their process.

Developing countries with their growing populations and economies are increasingly pressing for access to technology and resources, and are looking to developed countries for this kind of support. This is not for Climate Change, but for dealing with growing populations, for dealing with poverty, for dealing with environmental issues, for dealing with a range of issues that are major challenges to those countries. That is going to take major resources. The climate issue is an important focal point of international debate, but it is not for the climate issue the they are looking for resources, though perhaps a win-win process could develop where the resolution of development issues can also impact environmental issues. International environmental issues will be closely linked to a nation's economic energy and social goals.

I'm just going to touch on the science, because we have several experts here. But we should be aware of what transpired in Madrid. The IPCC summary stated the balance of evidence suggests there is a discernible human influence on climate change. But understand that this report came out of a report of six pages, which came from a report of 40 Pages, which came from a report of 1500 pages. They also qualified that language in preceding language, which said that our ability to quantify human influence on global climate is currently limited because the expected signal is still emerging, and because there are uncertainties in key factors.

One must watch this process carefully especially if major economic decisions will be made as a result of discussions taking place within the IPCC and other science bodies. The key fact remains we are not confronting catastrophic climate change today. According to recent studies by OTA and others, we have time to take sensible approaches. Earlier studies on the economics of this issue say the same thing.

This is a global issue. For the U.S., the impacts of additional commitments by Annex One parties, developed countries plus Central Europe, and post 2000 actions must be analyzed and assessed for their impacts on economic growth, jobs, international trade and competitiveness. I don't think any sensible nation should make any decision without understanding fully the economic impacts of this issue.

Secondly, we think the U.S. should continue to reject targets and timetables as a strategy to implement the Framework Convention on Climate Change. Rigid targets and timetables, we believe, will lead to limits on U.S. economic growth, and subsequently - and this is very important, because we are a worldly economic driver - world economic growth, which will in turn reduce global standards of living, and limit the opportunities for transfer of technology to developing countries, which are the largest potential sources of greenhouse gas emissions.

We are in a serious negotiation, and it will be over in about 15 months. Being in a serious negotiation, and talking about post-2000 measures, we have to take this issue very seriously. We also have to take into consideration national circumstances, especially in the United States.

For example, relative to developing countries, the U.S. has higher population growth rates, lower population density, a more intensive transportation infrastructure and a larger existing housing stock. So in discussing the climate negotiations, we are talking about direct economic impacts, and we are talking about lifestyle issues.

Joint implementation actions with developing countries beyond the existing U.S. pilot program should be a priority. And technology cooperation activities should be strengthened and expanded.

As I noted earlier, we have stressed to our government the need for comprehensive analysis and assessment before we make decisions on Climate Change policies. We believe that sensible Climate Change policy making must involve careful consideration of the cost of mitigation and adaptation options, together with what those options may buy, in terms of reducing potential Climate Change.

As we look at the ad hoc Berlin mandate process, we have already been through two of six negotiations. The GCC believes the U.S. should undertake a serious and comprehensive economic analysis of proposed Climate Change policies, and report the results to Congress and the public before it adopts any position on the global climate international process that differs from the U.S. commitment in the Rio treaty.

Further, we feel that such an analysis must include the impact on the U.S. of any proposed policies which exclude developing countries whose lack of climate obligations should be an important part of U.S. economic decision making.

There are over a hundred developing nations who were party to the treaty who do not have any obligations under the Berlin mandate in the post-2000 period. There is some movement towards some of them reporting analyses of emissions, but they have no specific obligations. So the negotiations taking place are only for OECD and developed countries, not for other countries. Yet, the non-OECD countries' emissions are going to grow tremendously. The U.S. also illustrated this in a presentation on the floor of the last AGBM meeting last month.

As part of the Berlin mandate process to negotiate additional emission reductions for Annex One parties only, a draft protocol submitted by the Alliance of Small Island States calls for a 20 percent reduction of green house gas emissions below 1990 levels by 2005, and will be included for consideration in the process. We think this needs to be thoroughly studied. Does the U.S. know what the impact on U.S. manufacturing, competitiveness and jobs would be if we reduce emissions by 20 percent below 1990 levels by the year 2005? A recent DRI study shows that a $100 per ton tax reduces GDP by 2.3%, decreases business investment by 4.6%, and reduces consumer spending by two percent. Several other studies have shown the same kinds of dramatic effects.

Jae Edmonds presented a paper which pointed out that the most important approach to emission reduction would focus on technology and development starting in the next 25 years or so. He also indicated in his paper that the stabilization of C02 concentration requires a long term global effort. I emphasize global. The OECD cannot go it alone.

We have asked the U.S. to look at a number of factors in relationship to trade, impact on developing countries, trade flows, business investment, and Gross Domestic Product, not only in the context of the AOSIS protocol, but also in the context of several other measures that are being recommended in this process.

We have supported voluntary programs. We will continue to do so. We think they are important. However, one has to understand that progress will not be linear. Many of the investments and voluntary efforts that are made today won't have benefits for four or five or ten years. But these programs are there, and industries continue to work very hard on volunteer efforts in the United States. The GCC, I might add, was also a leader in promoting the President's voluntary approach, and our members have gone to other businesses and industries in other countries to promote that process as well.

We support joint implementation, but one has to understand that we are going to have to deal with countries who have many barriers to extensive technology. We're going to have to work very hard as a country and as industries to work with those barriers, to develop infrastructure, to develop capacity building, and to get to know those countries better. We need to work with multinational banks, who have some knowledge of how those countries work.

I think one has to understand that a healthy U.S. economy is going to drive this issue, if you are really interested in preventing climate change, both in terms of investment in the United States, as well as investment elsewhere. We have lagged behind Japan and Germany in relationship to investment in new plant and equipment in the last 15 years. They have had more capital to work with. But the fact remains that we are going to have to invest both in research and in refining the technologies we have.

Also, as we look at new approaches we have to understand that countries differ in styles of government, legalistic systems, and energy and economic structures. Let's be sure we understand all competitive and economic impacts - the differences in countries, how they operate, why fossil fuel is important, the competitive advantages and disadvantages.

In closing, I would like to say that we are going to continue to be involved in this issue, we're going to continue to propose rational policies that make sense for the United states, not U.S. industry, but U.S. jobs, U.S. economic growth and economic as well as lifestyle well-being. We think this approach will drive successful climate policy and develop a worldwide approach.

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