The L-Prize: Recognizing innovations

Philips Electronics has submitted an entry for the Bright Tomorrow Lighting Competition, or L-Prize. Congress created this prize in 2007. If the performance data is verified and the Philips bulb, or any other entrant, wins the prize, consumers could soon see a light bulb that is superior in nearly every way — in light quality, longevity and environmental impact — while consuming about one-sixth the power of the 60-watt bulb it would replace.

Widespread adoption of the bulb could save enough power to light millions of homes and would avoid millions of tons of greenhouse gas emissions. This presents an interesting case study in the potential, and maybe some of the limitations, of federal support for the development of clean energy technologies through prizes.

The Energy and Natural Resources Committee has a long-standing record of support for advanced lighting technologies.  The Energy Policy Act of 2005 included a Next Generation Lighting Initiative that created a public-private partnership and grant funding to accelerate the necessary research and development to make a next-generation light bulb possible. Congress subsequently appropriated money for the initiative and in a few years this research showed promising results. In 2007, when it began to look like a commercial product could be developed, the committee collaborated with industry and the Department of Energy (DOE) to develop criteria for a prize that could move the research to a viable consumer product. This led to Section 655 of the Energy Independence and Security Act of 2007, which laid out specific requirements for a replacement bulb and authorized a prize of up to $10 million for the winner.

Importantly, the provision also included a federal procurement requirement that is triggered when the prize is awarded, requiring the replacement of 60-watt incandescent bulbs in federal buildings with bulbs that meet the prize criteria within five years.  This means that producers of these bulbs can count on a strong market when they scale up their factories to produce larger volumes. They will be able to achieve economies of scale faster and bring affordable bulbs to the consumer marketplace sooner than has been the case in the past.

The DOE is also partnering with utilities across the country to further expand the marketplace and thus decrease the costs to consumers of replacing their inefficient bulbs with these next-generation bulbs. Couple this with available financing for domestic manufacturing through the Clean Energy Deployment Administration (CEDA) that the committee has included in the American Clean Energy Leadership Act (ACELA) it forwarded to the full Senate earlier this year, and you could see millions of affordable bulbs produced soon, creating jobs and energy savings for consumers much faster than would have occurred without government support. This represents the kind of certainty in both research and market support that industry needs to bring these advanced technologies to the market. I firmly believe that had Congress not shown such strong support throughout the development of this technology, we would not be so far along toward seeing this product in the hands of consumers.

But, is this model applicable to deployment of other clean energy technologies? Yes and no. The problem of inefficient lighting is fairly specific and the market is such that government purchasing can have a significant effect on the economic decisions of producers. Other technologies, such as electric vehicles or solar panels, compete within a marketplace that is far too large for government procurement to have much of an impact. These other clean energy solutions must also compete in the marketplace with incumbent technologies that in many cases have already been paid for and have never had to bear any of the environmental or national security costs they engender. Unless some policy is put in place to reveal these very real costs of incumbent technologies — whether they are cars that guzzle foreign-produced oil, or power plants that emit pollution that fundamentally degrades our planet’s ability to support us — clean technologies will simply not be able to overcome the price barrier and compete.

Our approach going forward must be as multifaceted as the problems we face. We need strong support for research and development to make sure options exist to meet our climate and energy security needs. We need to look at policies — including higher efficiency standards and a predictable price on carbon dioxide emissions — to ensure sufficient demand for advanced technologies exists, so that manufacturers and developers will be willing to make the needed significant investments.

We need to make sure we have programs and incentives to empower U.S. firms to manufacture these clean energy technologies in the United States. And we need to ensure that we have the government working with private capital markets, through entities like CEDA, so that the financing for clean energy deployment is available.

Ultimately, cleaner energy technologies will find their way into the market, because they are inherently superior. The choice before us, though, is whether we want the pace of development to be slower and to take place largely overseas, or whether we want the United States to lead the next great industrial revolution in clean technology. The Committee on Energy and Natural Resources, on a bipartisan basis, voted strongly for the latter earlier this year when it passed ACELA. The apparent success story of advanced lighting shows that Congress can get it right and have a major impact on clean energy markets of the future.  As we move forward towards considering ACELA and other clean energy proposals in the Senate, I hope that we can bring the same bipartisan resolve and diligence to their widespread commercial deployment, as well.

Bingaman is chairman of the Senate Energy and Natural Resources Committee.