The Path to Drawdown: LEDs
First invented in the 1990s, Light-emitting diodes (LEDs) designed as high-brightness, highly efficient light bulbs. LEDs work like solar panels in reverse, converting electrons to photons rather than the other way around. They use 90% less energy than incandescent bulbs, and half as much as compact fluorescents, for the same amount of light. While other lighting technologies convert energy into heat (and most of it wasted), LEDs convert 80% of their energy use into emitting light.
LEDs have many environmental benefits. Their efficiency in converting energy into light rather than heat helps reduce electricity consumption and air-conditioning loads. For people without ready access to ample energy, LEDs can be powered with small solar cells and can replace expensive kerosene lamps and their noxious fumes and emissions. When LEDs are used in streetlights, they can save up to 70% of energy and significantly reduce maintenance costs.
Project Drawdown predicts that if LED lighting becomes widespread in both the residential and commercial lighting market, it can help avoid between 10.2 - 10.8 gigatons of CO2 emissions in residences, and between 5.9 - 6.7 gigatons in commercial buildings. To get there, the global market share of LEDs needs to scale rapidly:
- In 2018, LED lights comprised 3% of the overall commercial lighting market and 2% of the residential lighting market
- By 2050, LEDs should account for 95% and 90% of the residential and commercial markets, respectively
- That’s 12.82% CAGR for residential LED, and 11.21% CAGR for commercial LED lighting between 2018 and 2050.
Diodes Incorporated (stock ticker: DIOD) manufactures and supplies a broad range of discrete, logic, analog, and mixed-signal semiconductor products. These products include diodes, rectifiers, transistors, MOSFETs, protection devices, etc., and serve the consumer electronics, computing, communications, industrial, and automotive markets. Headquartered in Plano, Texas, they sell their products worldwide.
DIOD's Role in Drawdown
Diodes’ product line consists of over 25,000 products that are designed for use in high-volume consumer electronic devices like liquid crystal display (LCD) and LED televisions and LCD panels, set-top boxes and consumer portables like smartphones, tablets and notebooks. In particular, these include LED lighting drivers, and their end-product application for industrial lighting, power supplies, LED lighting accounted for between 20% and 30% of Diodes’ total sales since 2018 (p. 4).
DIOD: What We Like
We commend Diodes for taking several initiatives to enhance their environmental sustainability. For example:
- In 2020, renewable energy accounted for 23.5% of their energy use (p. 18), up from 11.3% in 2018
- The share of recycled hazardous waste has gone up slightly, from 82% in 2018 to 85% in 2020 (p. 25)
In the area of supplier management, Diodes demonstrates boldness that’s rare among public companies. Their detailed supplier code of conduct (p. 5) sets out their expectation for suppliers to improve energy efficiency and minimize energy consumption and GHG emissions.