Court Upholds DOE 95% Efficiency Rule for Gas Furnaces
Key Highlights
- The court's decision supports DOE's 95% efficiency standards for gas appliances, which could save consumers nearly $25 billion over 30 years.
- Industry groups argue that the new rules may force costly home renovations and limit appliance options for consumers relying on natural gas.
- Natural gas remains the most affordable heating option, with prices expected to stay lower than electricity through 2050, despite regulatory changes.
WASHINGTON — A federal appeals court has upheld Biden-era rules setting tighter standards for gas-powered commercial water heaters and consumer furnaces, according to Bloomberg Law.
The 2-1 decision Tuesday by the U.S. Court of Appeals for the District of Columbia Circuit is a loss for the American Gas Association (AGA) and other trade associations, who argued the Department of Energy rules for the appliances could effectively push certain types of gas appliances off the market.
Writing the majority opinion, Judge Robert Wilkins said the court had “no reason to second-guess DOE’s view” and that the court found that "DOE's economic justification analysis and conclusions were robust."
The regulations, finalized in 2023 and 2024, set a 95% efficiency standard that DOE estimates could save consumers nearly $25 billion in energy costs over 30 years. However, the AGA argues that the ruling, if left unchanged, will force expensive home and building renovations to accommodate new appliances with vastly different venting and drainage systems.
“The DC Circuit Court failed the American people today, making a decision that removes choice and could force up to 55% of gas households into expensive home renovations and higher energy bills,” said AGA President and CEO Karen Harbert in a statement. “Long standing U.S. law does not support this conclusion, and we strongly disagree with this decision. America’s natural gas industry will continue to fight to protect American consumers’ right to choose their appliances and energy sources.”
The U.S. Department of Energy data shows that 30% of senior-only households, 26% of low-income households and 27% of small business consumers will face higher costs as a result of the new regulation. For households with mobile home gas furnaces, 39% of consumers would be negatively affected by the proposed standard under DOE’s likely significantly underreported analysis.
Natural gas is the most affordable home heating option for Americans and is 3.5 times more affordable than electricity. It’s projected to remain one-third to one-half the price of other fuels through 2050. While electricity and other heating fuels may face higher costs this year, natural gas bills are expected to be 8% lower this winter than the prices consumers faced during the similar weather of the 2022-2023 winter season, according to AGA’s winter heating outlook. Switching to electric heating threatens Americans with higher home energy bills at a time when rising prices remains a top issue for the American public.
What It Means for HVAC Contractors:
The DOE rule requires all new residential furnaces to achieve at least 95% AFUE. The rules apply based on manufacturing dates, with no sell-through limitations or installation deadlines.
- Residential furnaces: Must achieve 95% AFUE or higher if manufactured after Dec. 18, 2028;
- Commercial storage tank gas water heaters: Must achieve 95% thermal efficiency if manufactured after Oct. 6, 2026; and
- Commercial instantaneous gas water heaters: Must achieve 96% thermal efficiency if manufactured after Oct. 6, 2026.
For HVAC contractors, the ruling signals a continued national push toward high-efficiency heating technologies — requiring awareness of venting, drainage, and installation changes that could impact retrofit and replacement projects.