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What does this legislation mean for existing CFL recycling programs? Although requiring manufacturers to finance CFL recycling may seem like a sensible approach, manufacturers face obstacles in implementing such a program. And if similar legislation is adopted in other states, it could have important implications for utility-sponsored CFL recycling programs.
Since June 2007, Efficiency Maine (part of the Maine Public Utilities Commission) has been running a free statewide pilot CFL recycling program for residential bulbs at about 200 retail stores. According to Richard Bacon, program manager for Efficiency Maine, the cost is "approximately $3,000.00 per year for collection buckets, and about the same amount for the time it takes field representatives to deliver buckets and train store clerks. There are also additional costs in adding recycling information to our advertisements that promote CFLs. Hard costs are around $6,000.00, and ancillary marketing costs might be $10,000 to $15,000."
Although the law took effect in September, planning is still in the preliminary stages. Manufacturers are required to submit a plan to the Maine Department of Environmental Protection by January 1, 2010. Once approved, the program must be operational by January 1, 2011 (unless the law is modified at some point).
In discussions with Efficiency Maine, the National Electrical Manufacturers Association (NEMA) inquired about the prospect of substituting industry funding for the Efficiency Maine program with the state retaining operational control, but Efficiency Maine staff showed little interest, according to Mark Kohorst, senior manager for environment and safety with NEMA. "The Maine law includes a provision that allows manufacturers to do this, and we thought it might minimize disruption and help keep costs down. Instead, it seems like we'll have to build much of the system from the ground up."
Yet Bacon says that "the infrastructure is in place and would only need to be modified somewhat to expand to all lamps, including residential linear lamps; and secondly, if through negotiations with all parties it is agreed to that Efficiency Maine is the best venue to manage the statewide CFL recycling program, then we would strongly consider it." He envisions two additional possibilities for setting up a new CFL recycling program: "The lamp manufacturers could each create their own programs, or they could pool their money and issue a Request for Proposals for third-party providers, perhaps recycling companies, to handle the recycling and marketing of the program," he explains.
The manufacturer perspective
Mark Kohorst believes it isn't that simple. NEMA's "primary concern in Maine is that a manufacturer-funded and -administered program is the highest-cost and least-efficient way to establish a convenient recycling program for household lamps."
The state of Maine regards this new legislation as building upon its existing computer recycling (e-waste) law, which requires electronics manufacturers to pay for recycling. Yet Kohorst notes that "paying $15 to recycle a $700 TV is one thing. But the cost of recycling a lamp, not just processing, but transport, administration, and other costs, equals a huge percentage of a bulb's sales price. And there's no model for recycling any other product that has all these factors involved."
One of the big unknowns is how much it will cost to transport bulbs from the collection sites to recycling facilities. "The processing costs may be somewhat uniform, but the actual cost per bulb is going to be a lot more in rural areas where the bulbs need to be transported a long way at considerable expense, and that varies a lot in different states." he says. "And these products have long lifetimes. How do you plan for and cost out the business model for recycling a product you're selling today but won't take back for seven years?"
Kohorst also points out that there is no intrinsic value in lamp recycling for bulb manufacturers, like there would be for, say, aluminum manufacturers who can re-use aluminum from recycled soda cans to create new cans. "We can recover some of the mercury, which is recycled and used to make more lamps. But there is nothing to recoup the cost that makes the bulbs worth recycling from an economic standpoint. If there were, industry would have much greater incentive to do this."
Implementation challenges
According to Mark Kohorst, logistical challenges abound for a new collectively managed, manufacturer-funded CFL recycling program. "We would have to take over or renegotiate contracts in place, establish relationships with many retailers, and figure out how much each manufacturer pays," he explains. And manufacturers will have to somehow ensure that they collect only their own bulbs. "GE doesn't want to be paying to collect Phillips bulbs," Kohorst adds. "We may therefore have to segregate lamps by manufacturer -- which no retailer's going to want to do."
Surprisingly, NEMA is having difficulty just convincing retailers to participate. Primary collection sites for the current Efficiency Maine program include home improvement stores and hardware stores, many of which may be willing to continue participating if there are no additional costs or administrative hassles. However, NEMA recently met with retail-sector associations representing grocery and drug stores, and found that many of these types of retailers do not want to take part in a CFL recycling program.
"Grocery and drugstore retailers sell a lot of CFLs, and their participation would really help make a recycling program convenient. But they're worried about liability and storage space, and we suspect many will not want to participate," he says. "If our goal is to offer a program with a lot of convenient collection sites, this makes it difficult to achieve."
Who should pay for CFL Recycling?
Currently, only two large national retailers, IKEA and Home Depot, fund and manage CFL collection and recycling through their stores. On the other hand, numerous utilities provide financial incentives for CFLs and sponsor CFL recycling programs to provide an end-of-life option for bulbs they promote. This may be in the context of a specific service territory, or partnering with other utilities, retailers, and state agencies to provide comprehensive services throughout a state. Not surprisingly, utilities and manufacturers have differing opinions as to who should ultimately foot the bill for CFL recycling.
Kim Sherman, product portfolio manager at Xcel Energy, says "CFL recycling is a service in which all stakeholders should be leading, including cities, counties and governments. Due to a state statute in Minnesota, Xcel Energy spends a portion of its energy efficiency budget to promote and recycle spent CFLs." If, she notes, the burden of paying for bulb recycling is someday taken over by manufacturers in Minnesota, the utility could then put more resources into education and promotion. "Currently, we do some marketing, but the bulk of our limited budget is spent on recycling bulbs."
John Hargove, senior program manager at Nevada Energy says "I believe that the right people to run a CFL program -- or at least be significant contributors to it -- are the manufacturers, because they're making a big portion of the money on the sale of CFLs, and they're also well-positioned to reuse the material. And I think retailers are the primary mechanism for the movement of the material -- theoretically, they can send collected bulbs back upstream to the CFL manufacturer," he says. "But does taking over CFL recycling present a good cost-benefit for manufacturers? Is it okay for the retailer? If there is absolutely no value to the recycled CFL, then the entire cost has to be borne by someone or some collection of people."
In comparison, NEMA believes in "a shared-responsibility approach where everyone contributes according to their strengths. What manufacturers do best is reduce the amount of mercury in bulbs. Lamps have a fraction of the mercury they used to contain just 10 years ago, and they're very close to introducing non-mercury alternatives that are going to be even better. And retailers have the one-to-one, upfront relationship with the customers -- which makes them more logical collection sites," Kohorst explains.
"Governments have enforcement authority, which they unfortunately don't use often enough. They should enforce lamp recycling in the business sector, which by far has the biggest percentage of lamps and mercury right now," He adds. "We think utilities are in a good position to provide funding for recycling, to recover the funds, and to spread them across a very broad base. Economically, that makes more sense than forcing manufacturers to absorb a 50 to 75 percent increase in the cost of the product."
Passing the costs on
Who will ultimately absorb the additional costs that manufacturers take on to recycle CFLs in the state of Maine? They may end up being passed on to consumers, which could have a negative effect on CFL sales. "If manufacturers can add these costs to CFL bulbs, you're pushing up the price of a product that governments, NGOs, manufacturers, retailers, and utilities are promoting," says Mark Kohorst. "Over the last few years, there's been a lot of progress made in making them more affordable. This type of policy decision could reverse that trend and force manufacturers to make the bulbs more expensive."
Big-box retailers may not accept a price increase, which would pose an additional challenge for manufacturers in planning and launching a new program. In fact, Kohorst says that bulb prices are not ultimately determined by the manufacturers, but by large national chains like Walmart, Lowe's, and Home Depot, which have enormous buying power. "It is possible that some retailers will reject a 50-cent or so increase in the wholesale price of CFL bulbs, and instead may choose to procure bulbs from lower-cost, less well known manufacturers from Asia," he explains. "It is difficult for U.S. manufacturers to make these demands on their retail partners -- especially with a commodity product like this."
As a result, Kohorst thinks it makes more sense to spread the cost more broadly through either a solid-waste disposal charge, or through existing utility ratepayer-funded CFL recycling programs for electricity consumers, where available.
Will manufacturers continue selling CFLs in Maine?
Starting a new CFL recycling program from the ground up presents manufacturers with a number of logistical challenges, including the reluctance of some retailers to participate, and the potential for much higher costs. Will it even be worth it for manufacturers to continue selling CFLs in the state of Maine?
"This is a fundamental question that manufacturers will have to answer," says John Hargrove. "If this legislation creates a situation where lighting manufacturers can no longer sell into that market, then the legislation will have had the opposite effect. What will end up happening is only incandescent light bulbs will be sold -- which nobody wants." In addition, this possibility has the potential to severely impact utility efforts to promote efficient light bulbs.
"Significant change is often painful. If manufacturers are willing to take over the costs and administration of CFL recycling programs, how do we collectively as a society make this effective? You can't pin all the cost on somebody that can't generate a benefit from it -- otherwise, they won't participate, or they'll go broke trying," Hargrove explains.
A decision by manufacturers as to whether they will continue selling CFLs in Maine can only be made on an individual company level -- antitrust regulations prohibit such discussions among competitors that supply the same market. "Each company will have to independently look at the situation and make a business decision on a case-by-case basis," Kohorst says.
In the meantime, NEMA is moving forward to identify the best way to meet the requirements of the new law in Maine. "We're looking into all possible collection mechanisms. We will be talking further with recyclers who are already engaged in providing services in the state. Our goal is to find the most manageable, least-cost way to do this that meets state requirements and recovers the highest achievable number of lamps."
Kohorst would advise other states that consider similar legislation to "avoid market disruptions and overly costly approaches that are going to interfere with the increased use of energy-efficient lighting. Everyone wants people to use energy-efficient light bulbs, and CFLs have distinct advantages over incandescents. There are cost-effective ways to increase recycling behavior."
Numerous CFL recycling programs have been established over the past few years, but we have a long way to go to change the consumer mind-set that light bulbs are a throwaway item. Ultimately, it will benefit all supporters of CFL recycling -- retailers, manufacturers, state and local governments, utilities, and consumers -- to come up with a solution that is not too burdensome on any one stakeholder in order to avoid losing ground in CFL recycling efforts.