One More Anti-Green Energy Win for the Tea Party

NEW YORK ( TheStreet) -- Chalk up one more victory for the Tea Party muscle within the Republican Party in its battle against all things green energy. On Thursday night, omnibus spending legislation approved by the House and Senate to avert a government shutdown removed light bulb efficiency standards that would support the adoption of higher-efficiency bulbs.

The light bulb issue -- the government plans to require higher-efficiency bulbs that would lead to greater adoption of compact flourescent and LED bulbs starting next year -- caused a light bulb to go on above the heads of the Tea Partiers, who realized late in 2010 that it was one more way to call President Obama a totalitarian dictator: The man had the gall to dictate what kind of light bulbs Americans use in their homes. Not on the Tea Party's watch!
As president, Michele Bachmann will defend your right to use an outdated light bulb.

As Daniel Weiss of the Center for American Progress noted in a previous conversation about the politics of the light bulb (when this issue first came to prominence last year) the totalitarian light bulb state is just one more wedge issue in an election cycle, in the same way that the right to bear arms is a great way to get the masses excited, or to get people out to the polls or for the big oil and gas lobby to raise money for the Republican party ahead of elections across the country. The right to choose your own energy-sapping, outdated light bulb is at the heart of the basic tenets of the right to life, liberty and the pursuit of happiness on which this nation is founded, at least according to the Tea Party. Mind you, it's not likely that Founding Father, scientific tinkerer and electricity pioneer Benjamin Franklin would have approved of a society that barely updated a light bulb in a century and then continued to resist innovation.

According to a report in The Hill, Senate Democrats didn't support the language, but it made it into the final version of the bill.

In truth, the light bulb "ban" does no such thing, and as written into law during the presidency of George W. Bush, only requires traditional incandescent light bulbs to be 30% more efficient starting in 2012, as opposed to being replaced entirely.

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"President Bachmann will allow you to buy any light bulb you want," The Hill quoted Michele Bachmann as saying this summer.

Of course, just saying "President Bachmann" can send a chill down one's spine, but if Bachmann has her way at least it's a chill that can be warmed by the inefficient heating device that has doubled as a source of light for the past hundred years, otherwise known as the incandescent bulb.

At TheStreet, being a source of market news, there are times when the business community stands up and speaks out against regulation that is seen as being anti-free market, or as a handicap to small or large businesses, and there are legitimate market reasons for debate.

In the case of the light bulb "ban," TheStreet has been hard-pressed to find any business interest that agrees with the Tea Party. The major industrial players in the lighting market, like GE ( GE) and Siemens ( SI) are all for LEDs, and GE is phasing out its manufacturing of incandescent bulbs regardless of the Tea Party. The industrials involved in building retrofit work like Johnson Controls ( JCI) are all in favor of LEDs as part of a more efficient future, and a way for them to make more money.

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The trade group representing the lighting fixture manufacturers of the U.S. is in favor of the LED bulb legislation too. In fact, it would seem that the only support for the incandescent bulb that is not purely political and one more sign of Tea Party ridiculousness would be the niche collector of the incandescent bulb, who can't part with his vinyl record collection in the garage, his Star Wars action figures, or apparently, the soft, warm glow of the Edison 60 watter.

From a market perspective, the light bulb nuttiness has no place, and no purpose, and when it's hard to find any major business interest that is coming out against President Obama over a market regulation issue, that tells you all you need to know. For investors who are in the LED space, possibly through an investment in LED light bulb company Cree ( CREE), the good news is that this political issue won't have too much of an impact on the market.

Aaron Chew, analyst at Maxim Group, who launched on Cree at a buy this week, said there is going to be constant debate about this issue and how it impacts the market, and he sees three key points:
  • His bullish thesis on Cree assumes no incandescent replacement market for LEDs as this goes in favor of compact fluorescent bulbs anyway (CFLs)
  • No subsidies are required for LEDs; though they help, they aren't needed as the economics work immediately based on the payback period for making the conversion to a higher efficiency (i.e. lower energy bill) bulb
  • The market is commercial installations (i.e., outdoor area, retail, parking lots, etc.) and municipal (i.e., streetlight and outdoor public areas).
  • "As most of these applications require very high labor/installation costs LEDs make immediate sense and the market I think will quickly shift in favor of LEDs regardless of government subsidy and spending programs," Chew said.

    There's also the point to be made that while Chew is focused on the non-residential market, the adoption of LEDs by the residential market is so hard to predict that making market bets based on its trajectory is ill-advised in the first place. For all the talk of a long-term secular trend toward LEDs that led Cree up to the dizzying heights of a $70 share price earlier this year -- and to a price near $100 back in 2000 -- (Wall Street also has some nutty light bulbs that go on above its head when there's an agenda to support), that residential market trend remains elusive.

    Other analysts aren't as sure about the commercial market viability in the short-term, worried that the general state of austerity budgets across the U.S. may keep municipal leaders from paying up front for LEDs even if the payback period economics make sense over the long-term. However, at least that's a logical economic argument to have, as opposed to the twisted logic of a "dictatorship of light" run by totalitarian-in-chief President Obama.

    -- Written by Eric Rosenbaum from New York.

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