Gas Furnaces Face 95% Efficiency Standard With Final DOE Rule

The Biden administration has finalized national efficiency rules for residential gas furnaces affecting about a third of all US homes, updating a 36-year-old standard that effectively phases out older furnace models.

Non-weatherized gas furnaces and furnaces used in mobile homes would be required to achieve a 95% annual fuel utilization efficiency standard, up from 80% efficiency standard today, according to the final rule, shared in advance with Bloomberg Law. That standard effectively phases out less-efficient non-condensing furnaces and makes newer, less wasteful furnaces mandatory by late 2028.

The department said it carefully considered the benefits and costs of the rule. Consumers replacing an old furnace with a more efficient model will save $57 on their utility bills annually, totaling about $24.8 billion in cumulative savings over 30 years, the DOE estimated.

Over 30 years, it will cut carbon emissions by 332 million metric tons, equivalent to the combined annual emissions of 42 million homes, or about a third of all US homes. It will also cut methane emissions by 4.3 million tons over three decades, the amount emitted by roughly 29 coal plants.

The gas furnace standard was among the most anticipated efficiency rules to be issued by the department as it works through a backlog of standards left by the Trump administration. The DOE was required to finalize the furnace rules this week by a September 2022 court settlement with environmental groups.

The final rule is likely to be praised by energy efficiency and environmental advocates, while rankling natural gas utilities and business groups that urged DOE to withdraw the proposed rule.

It could also open another front in the political battle over the pace of electrifying home appliances, as the Biden administration and some states and environmental groups back electric heat pumps and question the health and safety of gas stoves.

A group of 28 trade associations, including the American Gas Association, the American Public Gas Association, and the US Chamber of Commerce, told DOE last year the efficiency standards would harm consumers that would have to update their existing venting system to accommodate a new type of furnace.

About 40% of furnaces shipped today are at or above the 95% fuel utilization rate, the groups wrote. Switching to an electric furnace may also bring higher operating costs and require upgrades to electrical systems, they said.

“Modifications to furnace efficiency standards will significantly affect the availability and affordability of consumer heating equipment, so DOE should not eliminate affordable heating options for consumers and small businesses,” the groups wrote.

But a group of nine electric and gas utilities—including Pacific Gas & Electric, Xcel Energy, Exelon and National Grid—backed the proposal while urging the department to assist lower-income customers with upfront costs.

“We fully support this decision and recommend that it be partnered with mechanisms to address the high costs that can be associated with some retrofit to accommodate the adoption of new, more efficient gas furnaces or the switch to electric heating, such as heat pumps,” the utilities wrote.

Residential gas furnaces account for about 19% of US annual residential energy use, the DOE said. Condensing furnaces use secondary heat exchangers to capture excess heat from the furnace’s exhaust gases. Non-condensing furnaces have one heat exchanger and vent exhaust gas into the air. The DOE notes Canada required condensing furnaces for residential heating more than a decade ago.

In the final rule, the DOE pushed back on comments that the rule was too prescriptive and argued it has legal authority under the Energy Policy and Conservation Act to update the standard.

While the agency acknowledged the 95% efficiency rating leans on condensing technology, the industry can develop new heat exchanger designs, venting systems, and materials that can provide additional avenues for increasing furnace efficiency to meet the standard. The rule’s five-year lead time allows further innovation, the department said.

“The possibility that some technologies may not be sufficient to achieve compliance is true for any performance standard, and does not transform a performance standard into a de facto design requirement,” the DOE rule states.

Compliance with the rule will be effective five years from the publication on the Federal Register, which has not happened yet.