2013 Review: Are EU and U.S. 2013 LED Policies Setting up Tech Barriers?

In the previous article we highlighted how China’s LED industry faces serious over subsidy situation due to overlapping funds issued by local and central governments. Compared to the Chinese government’s generous LED subsidy programs to manufacturers, the EU and U.S. are more focused on establishing new energy efficiency standards Some Chinese media outlets have interpreted this as setting up technical barriers. In this article we take a look at whether these claims are true.

EU’s raises LED standards

A Chinese-language news report from ChinaIRN.com noted EU and U.S. policies were raising tech barriers in 2012-2013 by issuing new energy efficiency standards that were adding production costs for Chinese LED manufacturers on Sept. 4, 2013. The report noted the EU Rapid Alert System (RAPEX) had reported 19 hazardous LED products from China between January to June this year. It also highlighted how the new standards were raising Chinese LED manufacturers’ export risks and increasing their production costs.

The claims appear slightly exaggerated. The EU Rapid Alert System (RAPEX) has only reported 11 hazardous LED products imported from China in 2013. The products reported posed potential electric shock, fire, and electromagnetic disturbances. Most of the products banned were manufactured by small to midsized companies with only two products belonging to unknown brands. While Chinese LED products may have been hurt temporarily, the banned products are likely to have a limited impact on the industry in general. For example, most products with fire hazards were decorative Christmas lights that consumers are unlikely to use every day. Secondly, as the ChinaIRN.com report noted, improvements in core technologies can help Chinese manufacturers’ products from being taken off the shelves. (Please see chart below for details).

Leading LED manufacturers based in Shenzhen are also well insulated from potential export losses. According to statistics compiled by China Export & Credit Insurance Corporation (CECIC), in September this year 227 out of 1,800 Shenzhen LED manufacturers were insured from export losses. Most of the companies are leaders in the industry. Of the 45 cases of export damages reported for the first eight months of 2013, total compensation approved amounted to US$ 4.19 million out of the US$ 7.84 million compensation claims. Chinese LED exports to U.S. and EU had the highest export damage risks. Shenzhen LED manufacturers make up a third of China’s LED industry.

New EU standards in 2013

The EU has maintained a very low profile this year having formulated only one new LED standard under eco-design of energy related products (ErP). Aside for the approval of the directive’s first phase implementation in Sept. 1, 2013, no new policy developments have emerged this year. An analysis of the new directive shows the standards have not been raised to impossible heights, but does attempt to eliminate low quality and less energy efficient LED products from the market.

 The directive requiring minimum efficiency for directional lamps toreach at least 80% of its total light output in a cone of 120 degrees. LED lamps and modules are also enclosed in this new directive, according to an Osram report. Under the directive, energy labeling will be regulated and expanded to new products launched in March 1, 2014. The new directive impacts the product’s energy efficiency, quality, and labeling.                    

Rising standards probably should be seen as a positive development for the industry, as it will help improve product quality and industry collaboration. In China, the Shenzhen LED Industrial Association and CEIC jointly formed a new LED platform to mitigate risks on Aug. 31, 2013 to cope with the EU’s new changes. The platform is expected to help Chinese manufacturers improve their product quality to meet EU standards and offer industry support in product hazard analysis.

US Energy Star Standards in 2013

The U.S. has been much more active than Europe in issuing energy efficiency standards this year even though Energy Star certification process for LED lights were affected by the Environmental Protection Agency’s (EPA) temporary shuttering in early October. The agency’s frozen funds during the U.S. government shutdown was the main reason behind the program’s temporary suspension, which was quickly reactivated after Nov. 17, 2013 with Congress signing the Continuing Appropriations Act.

On Aug. 28, 2013, the Environmental Protection Agency (EPA) issued the final draft for Energy Star Lamps V1.0 specification. The new specifications replace previous CFL V4.3 and Integral LED Lamps V1.4 specifications. Certification Bodies will cease certifying older products as of May 30, 2014. Lamps certified under previous standards will lose their Energy Star status on Sept. 30, 2014. One of the more significant changes in the draft was simplification of color-maintenance tests for lamps within a single product family and widening of ambient temperature ranges covered in the testing. This result was chiefly due to the lobbying by a Lighting Coalition led by Soraa in Jan. 2013 that asked the EPA to reconsider color and Color Rendering Index (CRI) requirements. The LED bulb’s luminous efficiency was sacrificed for higher CRI requirements, according to LED Magazine reports. In the case of this U.S. standard, it was actually a step down from previous requirements giving manufacturers more room to maneuver.

Energy Star label creates US$5 Cree light bulbs?

Rebates under the Energy Star label will help Cree drive down bulb prices further, according to a report by Seeking Alpha on Dec. 26, 2013. The company shocked the markets this year by being the first to make $10 LED bulbs, thanks to the Energy Star rebates, bulb prices will be further lowered to $5. The company received the Energy Star label in early October for two of its $10 bulbs, indicating its future products will be able to be priced at much lower prices. As a result, Cree will be able to boost LED bulb sales during 4Q13.

If San’an Opto is the darling of Chinese government subsidies, Cree is its U.S. counterpart. In mid December, Cree received US$ 30 million tax credit from DOE as part of the US$ 150 million 48C Phase II Advanced Energy Manufacturing Tax Credit Program that was initiated under the American Recovery and Reinvestment Act of 2009 (ARRA). Another U.S. manufacturer Osram Sylvania is rumored to have received US$ 1.6 million in tax credits, according to a LED Magazine report.

Also earlier this year, Cree received a two year $ 2.3 million subsidy from DOE on June 5, 2013 to develop a modular design for LED lights that can link together multiple units to fit larger areas. The company tied for second with OLED manufacturer PPG Industries, Inc. in terms of subsidies received. Eaton Cooperation was the largest benefactor receiving US$2.4 million out of the total US$ 10.1 million issued. Other subsidized companies included Philips Lumileds and OLEDWorks LLC.

U.S. domestic manufacturing focused policies

International LED manufacturers probably should pay more attention to U.S. domestic manufacturing focused policies. In the June subsidy announcement, DOE Secretary Ernst Moinz remarked the importance of “creating U.S. jobs.” Again, on Dec. 6, 2013, the DOE highlighted U.S. manufacturing in its latest US$ 10 million funding to support research, development and manufacturing of SSL. This trend corresponds to U.S. President Barack Obama’s economic policy of revitalizing U.S. manufacturing on Feb. 12, 2013.

The policy can also be seen in large scale city streetlight installments in Las Vegas and New York City. From Washington D.C. to Guam, many U.S. cities and states have announced intentions of overhauling conventional streetlights for LED. Notably, New York’s 250,000 streetlights upgrade was only open to U.S. manufacturing. However Bloomberg reporters noted while the lights belonged to a U.S. brand, it was made in Mexico. This offers some insights into loopholes in the regulation. Las Vegas streetlights created a lot of controversy as the installed lights made by U.S. manufacturer Intellistreets were equipped with video and audio recording capabilities. There was some concern it could be used for surveillance and monitoring purposes.

In addition to Energy Star standards, the DOE Municipal Solid-State Street Lighting Consortium (MSSL) issued new street light control standards, which was largely based on the previous standard. Other lighting related standards worth noting include California Energy Commission’s (CEC) new LED standards issued on Feb. 26, 2013 that have higher standards than Energy Star in terms of CRI. International manufacturers will probably face difficulties getting their products certified to meet DOE, Energy Star and local state standards. There is no doubt that costs for international manufacturers exporting to the U.S. will increase significantly if all 51 states have independent lighting standards.

Increasing favoritism for U.S. manufacturing will thwart foreign companies’ efforts to enter the U.S. market. However it is still too early to say whether U.S. LED industry will be increasingly protectionism orientated. If the overall economy remains sluggish, policy makers will be inclined to do so. However, there is still hope for global manufacturers in 2014, especially with the U.S. phase out of 40W and 60W incandescent bulbs starting in January. The incandescent bulb phase out regulation prohibits  manufacturing of incandescent bulbs, indicating a booming market for LED and other energy efficient lighting in the near future.

To conclude, the EU, U.S. and China have shown vastly different policy developments over the past year. The EU’s new standards are likely to pose certain technical barriers for small to mid-sized manufacturers without technology advantages. As the U.S. policies turn towards “Made In USA,” foreign companies will face more barriers entering the market. For foreign manufacturers to compete and overcome the technological challenges posed by emerging standards, developing core technologies and R&D will be needed.

(Author: Judy Lin, Editor, LEDinside)

Related Article: 2013 Review: China LED Policies Show Excessive Subsidizing Trend

Appendix 1. DOE Solid State Lighting Reports Releases in 2013 (From most recent to earlier reports)

Release Date

Report Name

Dec. 3

DOE Publishes CALiPER Snapshot Report on LED A Lamps

Nov. 21

DOE Posts Up Presentations at 2013 SSL Market Introduction Workshop


DOE Publishes New Report on Dimming LEDs with Phase-Cut Dimmers

Nov. 7

DOE Publishes New CALiPER Report on Subjective Evaluation of LED PAR38 Lamps

Oct. 31

DOE Publishes Pricing and Efficacy Trend Analysis for Utility Program Planning

Oct. 24

DOE Publishes Report on Color Stability of LED Lighting Products

Sept. 30

U.S. DOE Publish SSL Manufacturing R&D Roadmap

July 25

DOE Publishes Major New Study on Residential Lighting Use

July 9

DOE Releases Gateway Report Comparing LED Streetlights with HPS

May 2

DOE Publishes Updated SSL R&D Plan

April 30

DOE Report Estimates LED Savings in Common Lighting Applications

April 22

DOE Publishes LED Lighting Facts Snapshot Report on Indoor Ambient Lighting

April 17

DOE Releases GATEWAY Report on Parking Garage Lighting

April 16

DOE Releases Model Specification for Adaptive Control and Remote Monitoring of LED Roadway Luminaires

April 5

National Academy of Sciences Releases Report on Solid-State Lighting

April 4

DOE Publishes Exploratory CALiPER Study on Commercial Ambient LED Lighting

March 28

DOE Releases Report on LED Environmental Testing

Source: U.S. Department of Energy (DOE) Solid State Lighting Office, Organized by: LEDinside in Dec. 2013



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