Circular Economy in the Global Lighting Industry

The Impact of the Top 3 Strategic Imperatives on the Circular Economy in the Lighting Industry

Transformative Megatrends

Why:

• Several governments and international bodies across the globe are taking stringent steps toward controlling emissions by passing regulations to decarbonize the environment.

Frost Perspective:

• The push is forcing manufacturers across sectors, including lighting OEMs, to re-evaluate supply chains and consider carbon-neutral strategies across their value chain.
• Lighting is considered the starting point for building optimization as governments worldwide prioritize lighting advancements for energy efficiency and sustainability.

Disruptive Technologies

Why:

• The increased need for lights that are wholly sustainable across their life cycle is driving a radical change in almost every stage of the lighting value chain.

Frost Perspective:

• Technological advancements, including artificial intelligence (AI), predictive analytics, machine learning (ML), and 3D printing, will help increase the life span of lighting systems and components.
• Extending the life of components and effective recycling will significantly reduce the environmental impact of the lighting industry.

Internal Challenges

Why:

• Strict environmental regulations enforce green manufacturing practices and pressure original equipment manufacturers (OEMs) to decarbonize their supply chains, which could be complex and costly.

Frost Perspective:

• Despite the cost and operational constraints, more OEMs will likely ramp up circular economy practices in the upcoming decade to meet sustainability goals and stringent environmental regulations.

Scope of Analysis

• Lighting refers to the illumination equipment used in homes and buildings, including their façade, rooms, hallways, walkways, workspaces, and compounds, and public facilities, such as streets, parks, and sports venues. Lighting products and systems include light bulbs, lamps, and lighting controllers. In this analysis, lighting excludes applications in all types of vehicles and electrical appliances.
• Circular economy is fundamentally a model that prompts eco-friendly business processes, including but not limited to the use of resources (e.g., water, energy), ways a product is consumed, and disposal of products or materials. The primary purpose of implementing a circular economy in products and services is to improve sustainability and reduce carbon footprint.
• The objectives of this analysis aim to:
  • Analyze the overall circular economy practices in the global lighting industry
  • Focus on the qualitative analysis and trends of the circular economy in lighting
  • Understand the drivers and restraints of circular economy implementation in lighting
  • Identify the importance of circular economy for lighting
  • Highlight lighting companies’ practices to promote the circular economy
  • Present the benefits and importance of remanufacturing and reuse, recycling, product life extension, and eco-friendly materials in lighting
  • Establish growth opportunities of circular economy in lighting
• The analysis excludes revenue forecast, competitive trends, and revenue share and does not include analysis by industry segments. The global focus covers Europe, North America, Asia-Pacific, the Middle East and Africa, and Latin America.

Growth Drivers

• Several countries and international bodies are taking steps to reduce carbon emissions and mitigate the effects of climate change. These steps and regulations will push the lighting industry to push the bar further on decarbonization initiatives.
• Digitalization and technological innovations are revolutionizing lighting systems and controls, significantly extending their product life span.
• Increased prominence of green buildings and net-zero energy buildings is driving the adoption of sustainable lighting solutions.
• Growing awareness among OEMs to make their supply chains sustainable, reduce dependence on virgin materials, and create a fast-growing recycling supply chain is enabling the adoption of circular economy practices.

Growth Restraints

• Transitioning to circular economy practices often involves high initial costs. Setting up a recycling factory, restructuring long-established supply chains, and changing product designs to accommodate sustainable and recycled materials could be challenging and costly for OEMs.
• Insufficient government support could hinder widespread adoption. Existing regulations may not accommodate or support new technologies and business models, while a lack of clear policy frameworks or financial incentives can create uncertainty and discourage investment.
• Resistance to change and concerns about high upfront costs, potential disruptions to existing operations, and uncertainty about the return on investment impede adoption. Insufficient knowledge and expertise among businesses to create and execute circular economy practices exacerbate challenges.