9B-i 

APPENDIX 9B. MODELING OF RARE EARTH PRICE IMPACTS

TABLE OF CONTENTS

9B.1 BACKGROUND .......................................................................................................... 9B-1

9B.2 ANALYSIS ................................................................................................................... 9B-2

LIST OF TABLES

Table 9B.2.1 Average Mass Content of Rare Earth Elements in 800 Series T5 and 

T8 Lamps .....................................................................................................9B-2

Table 9B.2.2 Average Rare Earth Element Weight Percentages used in GSFL 

Triband Phosphors .......................................................................................9B-2

LIST OF FIGURES

Figure 9B.1.1 Rare Earth Oxide Historic Prices .................................................................9B-1

Figure 9B.2.2 Inflation-Adjusted, Triband Phosphor REO Price Index for GSFLs ...........9B-3
9B-1 

9B.1 BACKGROUND

Lamp manufacturers use triband phosphors to increase the efficacy of fluorescent lamps 

and improve their color quality and lumen maintenance. All GSLFs that meet current efficiency 

standards use triband phosphors. Triband phosphors contain certain rare earth elements - 

lanthanum (La), cerium (Ce), europium (Eu), terbium (Tb), and yttrium (Y) - which, according 

to manufacturer interviews provided to the U.S. Department of Energy (DOE), are generally 

purchased by lamp manufacturers in their oxide form. Between the second quarter of 2010 and 

the fourth quarter of 2011, the price of rare earth oxides (REOs) increased sharply1

, as shown in 

Figure 9B.1.1, causing concerns about the resulting price impacts on fluorescent lamps2. 

As described in chapter 2, DOE received a number of comments on the potential impacts 

of rare earth prices on lamp phosphors and therefore on the prices of the GSFLs covered in this 

rulemaking. This appendix describes the approach DOE took to projecting the potential impacts 

of volatile rare earth prices on lamp shipments, energy savings, and net present value of 

candidate standard levels considered in this preliminary analysis. 

Figure 9B.1.1 Rare Earth Oxide Historic Pricesa

 

 

a

 The reported oxide prices correspond to 99% purity minimum Free-on-Board (FOB) China for Ce, La, and Tb, 

99.9% purity minimum FOB China for Eu, and 99.999% purity minimum FOB China for Y. 
9B-2 

9B.2 ANALYSIS

DOE analyzed the impact of REO prices on GSFL costs based on historical prices of 

REOs and on estimates of the average rare earth element content in phosphors of high efficacy 

T5 and T8 lamps, as reported in DOE’s 2011 Critical Materials Strategy (CMS).2 The 2011 CMS 

estimated the content of rare earth elements in fluorescent lamp phosphors based on 

manufacturer interviews and lamps’ properties. According to the report, 800-series lamps use 

100% triband phosphor, whereas 700-series lamps use approximately 30% triband phosphor. For 

this rulemaking only high efficiency lamps (800 series and above) are relevant, because, 

according to manufacturers, the 700-series lamps cannot meet the current standards.3,b

According to the 2011 CMS, the amount of phosphor included in fluorescent lamps is 

approximately proportional to the surface area of the lamps. Therefore, T8 lamps on average 

contain about 1.6 times more phosphor than T5 lamps of the same efficacy, and 8-foot T8 lamps 

contain twice as much phosphor as do 4-foot T8 lamps of the same efficacy. Table 9B.2.1 shows 

the average mass content of rare earth elements in 800 series T5 and T8 lamps, according to the 

2011 CMS.

Table 9B.2.1 Average Mass Content of Rare Earth Elements in 800 Series T5 and T8 

Lamps

Lamp type Rare Earth Content (grams)

4ft T8 – 800 series 2.334

4ft T5 – 800 series 1.458

8ft T8 – 800 series 4.668

Table 9B.2.2 shows the average percentage contribution of the five rare earth elements used in 

GSFL triband phosphors according to the 2011 CMS. 

Table 9B.2.2 Average Rare Earth Element Weight Percentages used in GSFL Triband

Phosphors

Element Content

Lanthanum 22%

Cerium 6.5%

Europium 4.5%

Terbium 5%

Yttrium 62%

TOTAL 100%

 

b Manufacturers won an exception from standards for 700-series lamps, which extends the compliance date by two 

years, until July 14, 2014.3
9B-3 

 For the purposes of this rulemaking DOE calculated a triband phosphor price index for 

GSFLs that reflects the element mass content reported in Table 9B.2.2.

c The index is inflation

adjusted and normalized with respect to the triband phosphor cost between 2006 and 2009, the 

longest period prior to the peak for which data for all relevant REOs were available. As shown in 

Figure 9B.2.2, reflecting REO prices, the index rose rapidly in 2010 from a relatively stable 

period to a peak in 2011 and dropped almost monotonically to less than half its peak value in 

2012. 

 The future trajectory of REO prices is highly uncertain. Therefore, DOE developed 

alternative scenarios for high and low REO prices, reflecting their 2011 peak price and their

2006 – 2009 baseline average price. The reference assumption for REO prices is that they remain 

constant at the October 2012 level. These data were used in this preliminary analysis, because 

they are the most recent price data that are available. 

Figure 9B.2.1 Inflation-Adjusted, Triband Phosphor REO Price Index for GSFLs 

 To project the potential future impact of REO costs on GSFL manufacturing over the 

analysis period, DOE calculated three scenarios for lamp prices based on historic REO costs - a 

reference REO cost, a high REO cost, and a low REO cost. DOE used the price index to set 

these, reference, high, and low, values. 

 

c This analysis assumes that the relative percentages of rare earth elements reflects the relative percentages of rare 

earth oxides consumed in manufacturing. 
9B-4 

 The price of each GSFL, as a function of the REO cost, is expressed as follows: 

 

p(y)GSFL = mr × �cREO,scen + c(y)else�

Eq. B.1 

 Where:

 

p(y)GSFL = lamp price at year y, 

mr = markup of manufacturer cost to retail price: (calculated as 2.28), 

cREO,scen = REO cost for price scenario (high, low, and reference), and 

c(y)else = Cost to manufacture lamp at year y, excluding CREO,scen 

The retail price markup was estimated from data presented in the 2009 GSFL-IRL final 

rule technical support document, chapter 13 (Manufacturer Impact Analysis), using the retail 

price and the manufacturer production cost of each lamp option for all product classes, according 

to the following equation: 

 mr = 1

N

× ∑ pi,GSFL

MPCi

N

i 

Eq. B.2 

Where:

N = total number of GSFL lamp options for all product classes, 

pi =price of GSFL for lamp option i 

MPCi = manufacturer production cost for lamp option i. 

DOE addresses price learning in its shipments and national impact analysis (NIA) 

calculations. However, because price learning is not applicable to raw materials inputs to 

manufacturing and, therefore, is not applicable to the REO part of lamps costs, Eq. B.1 was 

rewritten in the following way for use in the shipments and NIA models: 

p(y)GSFL = mr × �SM × cREO,Ref + PLF(y) × �

PGSFL,0

mr

− cREO,Ref��

Eq. B.3 

 Where: 

SM = scenario multiplier for REO cost scenarios (described below), 

cREO,Ref = reference scenario REO cost per GSFL (itemized below), 

PLF(y) = price learning correction factor at year y (described below) and, 

pGSFL,0 = 2012 ‘medium’ GSFL price. 

The scenario multiplier (SM) is based on the triband phosphor price index, normalized to 

its reference scenario value. The high, reference, and low scenarios correspond to each of the 

following, respectively: the price index peak, the index for the most recent data (October 2012), 
9B-5 

and the 2006 – 2009 baseline average price. Renormalized to the October 2012 reference value, 

the scenario multipliers used in the preliminary analysis were:

• High scenario, SM = 3

• Reference scenario, SM = 1

• Low scenario, SM = 1

4

The reference scenario REO cost (cREO,Ref) is inflation adjusted ($2011) and is based on 

Oct. 9, 2012 REO prices, as follows: 

• 4ft T8, cREO,Ref = $ 0.47/GSFL, 

• 4ft T5, cREO,Ref = $ 0.30/GSFL, and 

• 8ft T8, cREO,Ref = $ 0.95/GSFL. 

The price learning correction factor (PLF) is defined according to the following 

expression: 

PLF(y) = (

X(y)

X(y0)

)−b

Eq. B.4 

Where:

X(y) = the cumulative production (total shipments) of GSFL between the year of 

introduction to the market to year y, as defined in Eq. 9.5, 

X(y0) = the cumulative production (total shipments) of GSFL between the year of 

introduction the market to the initial year of the forecasting period (2012), and

b = the learning rate parameter, as defined in Eq. 9.4. 

 The medium 2012 lamp price (pGSFL,0) is derived from chapter 5, Engineering Analysis. 

REFERENCES

1 Metal-pages. Historical Prices. 2012. www.metal-pages.com. Last accessed Oct. 09 2012 

2

 U.S. Department of Energy. DOE. 2011. Critical Materials Strategy. December 2011. 

Washington, DC. http://energy.gov/sites/prod/files/DOE_CMS2011_FINAL_Full.pdf 

3 United States Department of Energy, Office of Hearings and Appeals. Case Nos: EXC12-0001, EXC-12-0002, EXC-12-0003, April 16, 2012.