Sunday, August 26, 2007

When is a lightbulb not a lightbulb....

Mrs R got a piece of junk mail the other day. It is a promo from "Ecobulb" but is sponsored by Fly Buys, Shell and the Electricity Commission, or at least those are the logos on the letter. It is a good offer actually. It comes with a voucher for 5 Ecobulb lights for $10 and conveniently tells me that the normal RRP is $4.99. Good deal all round.

What is interesting to me though is the why. As a person immersed in the dark art of economics for many years, I see strategies and business rationale behind everything. I sadly can't enjoy a discounted piece of cake anymore without wondering the reason for the discount; is the bakery in debt, was the cake not a seller so has to go cheap, is it old cake, is it cheaper to discount than dispose of or is the baker just a good guy? You get the picture.

Anyway, the bulbs. The pamphlet says save up to $ Actually your immediate saving, based on the RRP, is $14.95 but you could save the rest based on a calculation using an Ecobulb for 3 hours a day at 18c/kWh over the next 9 or so years in place of a standard 100 Watt bulb, oh using all 5 bulbs. A reasonable model in economic terms but a long pay back in real dollars. But wait, there's more and the real reason for the promotion (in my opinion) is Carbon Credits.

So the answer to the above question of when is a light bulb not a lightbulb is when it's a strategy for collecting carbon credits. In the small print you'll find the following text:

"In purchasing or using Ecobulb lights, you agree that CO2 emission reductions resulting from their use are the property of Energy Mad Limited".

Fascinating. So you buy the bulbs. You pay to use them. Energy Mad collect Carbon credits. In fact they appear to be able to collect them irrespective of whether you use the bulb or not as just purchasing the Ecobulb is your agreement. No signature, just passive consent. I wonder if buying clean burning fuel at a petrol station provides the same consent to the seller?

One thing is sure. Carbon Trading will be huge but full of dubious ways to collect credits and dubious statistics about emission reduction that don't actually help the environment one bit. There is some good information on Carbon Offseting at the New Zealand Carbon Exchange. Bet you didn't know we had one.....

Forgive me talking numbers but lets examine the Ecobulb Model.

You buy 5 Ecobulbs and use 3. You stick 2 in the back of your cupboard and forget about them. (I have a graveyard of bulbs and batteries in the back of the cupboard and can never find them when I need them!) Energy Mad Limited (somehow) claim their Carbon Credits from this sale of 5 Ecobulbs. If you repeat this scenario over a large population you end up with some big dollars based upon flawed data. In my scenario, you have an efficiency of 3/5ths i.e. the sales data is 60% accurate against the actual usage data; not a reliable model.

In collecting erroneous sales data and applying it to the real world, you are making a basic error that every good economist understands. You must factor human behaviour into every model. Economics is 1 part fact and 1 part voodoo. The voodoo comes from understanding how people will react to data that you don't yet have and then allowing for it in the facts that you don't yet know.

My assumption is that Ecobulb knows this and the model that is in place to allow for the collection of Carbon Credits has an input for voodoo for all those bulbs sitting in the back of cupboards. Tui moment or fact? Still, a good deal, 5 bulbs for $10 so I'll be off to Shell to get mine.


  1. You're not in Marketing are you! I'd be lucky to find eco-anything over here. I saw a recycling bin out in the the middle of nowhere. And none in Dubai city. It's a crime.