Government paves way for phasing out halogen technology and regulating LEDs

The ready availability of solid state lighting has prompted the Australian Government, in combination with states and territories and the New Zealand Government, to commence the process of phasing out halogen technology. An important step was the release in November of a 200-page document called Consultation Regulation Impact Statement – Lighting. 

The Consultation RIS addresses several lighting issues and technologies and proposes regulation in a number of areas. However the most significant for the lighting industry – as well as for Australian consumers - is the proposed regulation of LEDs.

Why is regulation of LEDs needed?

If the Government is to ban the sale of halogen lights, it must be confident that energy efficient replacement products of adequate performance and reasonable cost can take their place. By far the most significant replacement products are LEDs.

Lessons have been learnt from the introduction of compact fluorescent lamps some 25 years ago. While considerably more energy efficient than incandescent lamps, consumers were turned off CFLs in droves because of their poor-quality light and high failure rate. This aversion continued for many years – well after better quality CFLs came onto the market. Government regulators and other commentators around the world saw the slow take-up of CFLs as a significant lost opportunity to reduce energy consumption.

Hence the consultation RIS goes into some detail as to why regulators consider it necessary to regulate LEDs. This is backed up by the Government’s own product testing and research. Following is its summary of reasons:
  • Consumers are being exposed to inferior LED products that are negatively impacting on consumer confidence and uptake of this more efficient technology.
  • Minimum energy performance standards (MEPS) have not kept pace with improvements in lighting technology and international best practice, and therefore are no longer achieving their purpose of removing the least efficient lamps from the market.
  • Imperfect information, combined with an increased diversity of lighting alternatives, makes it difficult for consumers to meaningfully compare the energy efficiency, quality and performance of lighting technologies or be motivated to do so given the low purchase price.
  • Split incentives exist whereby commercial and rental property owners and some builders have no incentive to purchase more efficient but higher upfront cost products, as there is no incentive for them to reduce electricity or replacement costs.
The Consultation RIS includes several options to reduce the energy consumed by lighting. The largest impact on energy consumption is so-called Option F, which would see MEPS introduced for LEDs in combination with some additional measures. The net benefit is an estimated $2.81 billion, saving approximately 25,000 giga-watt hours and 16 million tonnes of greenhouse gas emissions cumulative to 2030.

According to the Consultation RIS, Option F would require consumers to pay ‘a little’ more upfront for light bulbs, but households will save money through reductions in electricity and replacement costs. Some households are likely to incur a one-off upfront cost to resolve compatibility issues with existing lighting systems. (This refers to the incompatibility of LEDs and some existing transformers and dimmers.)

Next steps

Implementation of Option F is the most likely outcome arising from the Consultation RIS and the preceding work of the Department of the Environment and Energy. Hence we are very likely to see halogen downlights effectively banned from sale and new regulations for LEDs covering energy efficiency and other quality parameters. This is likely to take effect in 2018, possibly commencing with a staged approach to introducing MEPS for LEDs.

In the meantime consultation with stakeholders will be undertaken and the Consultation RIS will be subject to rigorous assessment by the Office of Best Practice Regulation.