China is sparing no effort to propel wider use of energy-efficient lamps, especially light-emitting diode (LED) lighting products. LEDs present many advantages over incandescent lights including lower energy consumption, longer lifetimes, smaller size and faster switching.

"But LEDs are less competitive due to higher prices, so it will still take some time before they are fully accepted by consumers," said Xie.

He added that the NDRC and the Ministry of Finance (MOF) are mulling subsidies to accelerate the promotion of LEDs.

China's LED industry is already taking shape. In October 2009, the NDRC announced a series of measures to support the emerging sector, including government purchases and favorable import tariffs. Many local governments also followed suit, handing out generous policy incentives. The past two years have witnessed the start of nearly 100 large LED projects across the nation, with total investments exceeding 30 billion yuan ($4.72 billion).

Xie expected the output value of China's LED industry to double in the next five years. The sector is an important part of the energy conservation and environment protection industry, one of the seven major strategic emerging industries supported by the government.

Looming concerns

A recent research report from the Guoyuan Securities Co. Ltd. said China's LED industry is getting into full swing, and LEDs are widely used in cell phones and liquid crystal television. But they are yet to be widely accepted as a general lighting source, it said.

"The biggest problem is high costs—its manufacturing cost is 50-60 times that of incandescent lamps," said the report.

"Without government subsidies, it would be difficult to promote LEDs as general lighting, but elimination of incandescent lamps has provided a powerful catalyst for the promotion of LEDs," it added.

In 2008, the NDRC and MOF launched a lighting program and distributed more than 400 million energy-efficient lamps to consumers. But the program encountered many problems, hindering further promotion of those lamps.

Energy-efficient lamps contain mercury, a neurotoxin that can pose a serious threat to environmental health. The amount is tiny—China, as well as the European Union, allows each fluorescent lamp to contain no more than 5 milligrams of mercury—but that is enough to cause acute environmental damage and has sparked worries over the disposal of those lamps.

Fluorescent lamps use electricity to stimulate mercury vapor. The mercury atoms produce short-wave ultraviolet light that then causes a phosphor to fluoresce, producing visible light.

Some people suggested manufacturers recycle the lamps, but that was less feasible given the high costs.

"Indeed, it is difficult to establish a nationwide recycling system in such a big country," said Xie. "What we are doing is further improving technologies to decrease the mercury content of such lamps."

Moreover, the high prices of energy-efficient lamps are also impeding the consumer acceptance.

In China, an LED lamp costs nearly 100 yuan ($15.75), compared with less than 10 yuan ($1.57) for an incandescent bulb. That is also why most Chinese LED manufacturers have focused on exports, instead of the home market.

Chinese LED firms still have a long way to go to sharpen their competitive edge. Chinese companies are good at assembly production, but one cause for concern is a lack of core chip technologies. U.S. and Japanese companies have dominated chip technologies, leaving Chinese firms in a weak position to compete.

Worse still, domestically made LED lamps suffer from the problem of a short battery life. As a result, it would be critical for domestic enterprises to strengthen efficiency and extend the service life of batteries so as to make their LED products more market competitive.

Phasing-Out Timetable

Nov. 2011-Sep. 2012 Transition period

Oct. 2012-Sep. 2014  Lamps above 100 watts to be banned

Oct. 2014-Sep. 2015  Lamps above 60 watts to be banned

Oct. 2015-Sep. 2016  Mid-term evaluation period

Oct. 2016-                  Lamps above 15 watts to be banned

(Source: Joint circular of NDRC and five other departments)