Great report by Steve Gelsi of Marketwarch.

Source: http://www.marketwatch.com/story/compact-fluorescent-bulbs-hit-a-wall-leds-beckon?dist=msr_1

 By Steve Gelsi, MarketWatch

NEW YORK (MarketWatch) -- With sales of pricy compact fluorescent bulbs slowed to a stop by the recession, the lighting industry is sharpening its focus on light emitting diodes in the hope this next-generation technology can rev up sales.

While the cost of a compact fluorescent light (CFL) bulb has fallen as low as $2.50 each in multi-packs, old fashioned light bulbs sell for 40 cents apiece, helping the older incandescent technology maintain its glow.

Major bulb makers GE /quotes/comstock/13*!ge/quotes/nls/ge (GE 12.94, -0.74, -5.41%) , Siemens AG /quotes/comstock/13*!si/quotes/nls/si (SI 66.61, -3.91, -5.55%) and Philips gathering at the Lightfair International show this week in New York City looked toward the next generation of light emitting diodes (LEDs) as the next big thing in modern illumination.

While CFL sales now comprise a big chunk of the industry -- 20% or more at some companies -- the business has edged lower over the past 12 months.

"It's a problem all of industry has right now because times are pretty tough and the economy isn't growing," said Charles Jerabek, CEO of Osram Sylvania, a unit of Siemens. "It just puts a further challenge on us."

Light makers are showing off a growing stable of LED lights. With New York City and other major urban areas already using LEDs in traffic lights, the industry hopes to add to its success with street lights.

LEDs last much longer than CFLs and contain no mercury, a setback faced by compact fluorescent light bulbs.

Actor Ed Begley Jr., a speaker at Lightfair International and a well-known green power advocate in the entertainment industry, argued that CFLs help cut harmful emissions from coal-fired electricity plants by saving power, even though they contain some toxic materials.

"You're better to buy the (CFL) bulb even with that miniscule amount of mercury -- about the same as in a couple of cans of tuna -- and then recycle it at Ikea or Home Depot," Begley said. "If you don't buy the bulb you're putting more mercury into the air where you can't reclaim it."

Begley also championed the use of longer-lasting LED lighting now being deployed in the motion picture and TV industries as a way for studios to cut down on electricity bills and the expensive labor costs of changing bulbs.

Sylvania just introduced its first direct LED competitor to the 40-watt light bulb. The LED bulb uses 8 watts of power to produce about the same amount of light as a 40-watt bulb. The LED bulb's expected life of 25,000 hours amounts to eight times the life of a conventional light bulb. However, at a current cost of $50 each, the new bulb isn't quite ready for prime time.

Industry mavens hope to bring the cost down over time as they move past the less efficient incandescent bulb, which inadvertently turns most of the energy powering it into heat instead of light.

For this reason and others, Congress in 2007 approved a phase-out of incandescent bulbs starting with the 40-watt bulb in 2012.

Begley, who owns an electric car that he uses solar cells to recharge, said LED light bulbs could eventually take their place as the next big thing to save energy cheaply.

"I was a broke, struggling actor in 1970 -- I did the cheap and easy stuff that was available" to be green, he said. "There's many more choices today. CFLs are affordable to anyone today. You'll save money right away with energy-saving thermostats, weather stripping around your doors and windows."

Meanwhile, the trade group NEMA is expected to release its first-quarter survey of CFL sales next week. In the fourth quarter of 2008, the incandescent share of household lamp sales increased slightly to 77.5%, as consumers eschewed costlier CFLs.

Steve Gelsi is a reporter for MarketWatch in New York.