Court Decision Means Pressing Reset on Gas Furnace Energy Efficiency Standards, But Paves Way for Higher Energy Savings

 A court settlement approved today means that the U.S. Department of Energy (DOE) will have to redo important gas furnace energy efficiency standards.   But the good news is that this gives us the opportunity to press for even stronger furnace standards, and that’s good news for battling high heating bills as well as climate change.

In today’s order, the U.S. Court of Appeals for the D.C. Circuit OK’d a settlement between DOE and an industry trade association and others that will send energy efficiency standards for residential gas furnaces developed in 2011 back to DOE for another look.

These standards, which should have been providing savings to consumers already, have been hung up in the court for two years. While it’s disappointing they never went into effect, the settlement ends the delay and gives DOE the opportunity to come up with new ones that we hope will be even stronger.

The settlement also removes the risk that new standards for heat pumps and air conditioners – issued at the same time as the furnace standards and scheduled to become effective next year -- also would have been delayed by the litigation.

Why furnace efficiency standards matter

As this winter’s “polar vortex” drove home, heating bills are expensive and getting the furnace standards back on track is a big deal.  Heating represents the single-largest household energy expense for most families, with some 40 percent of the energy used on site in our homes going to keeping them warm. Over 44 million American households use a gas furnace to supply this heat. High-efficiency furnaces can cut gas usage by approximately 10 to 20 percent compared to a conventional new furnace, and even more in relation to older, dirtier systems. Unfortunately, the standards delay means less-efficient conventional furnaces are still being installed today.

DOE projected that standards would have saved Americans an estimated $10.7 billion in lower heating bills over the next 30 years, saving enough natural gas to heat 62 million average U.S. homes for a year and avoiding pollution equivalent to that produced by 30 coal-fired power plants in one year. These savings are especially important for low- and fixed-income families because a higher portion of their income goes towards energy bills.

How we got here

After decades of delay and struggle in obtaining meaningful furnace standards, NRDC worked with a group of consumer groups, state governments, utilities, and manufacturers to come up with proposed consensus standards in 2009. DOE adopted them in 2011, setting a 2013 compliance date.

However, a court challenge by an industry trade group of municipally owned public natural gas utilities apparently worried about potential loss of market share and revenues brought implementation to a halt in 2012. The trade group claimed DOE’s expedited approval process did not adequately address their concerns about the new standards. Notably, there was no challenge from the American Gas Association, the much larger trade organization which represents investor-owned natural gas utilities.

DOE chose to settle the challenge rather than defend its efficiency standards and under the agreement approved today, the agency will develop new standards within two years.

Although we would have liked DOE to stand its ground and defend the standards at the outset of the litigation, after so much delay, ending the continued legal wrangling is a step in the right direction. We believe that continued technology developments coupled with a growing need for national energy savings may well result in an event stronger set of new standards.

Where we might be going

The 2011 standards for furnaces, air conditioners and heat pumps were the first to establish regional requirements. While DOE standards generally are uniform nationwide, regional standards can make sense for heating and cooling equipment due to the variation in weather conditions.

New central air conditioners sold in hotter climates will need to meet stronger minimum performance criteria, for example. As part of today’s settlement, air conditioning units manufactured before January 2015 can be sold for another 18 months to exhaust existing inventory in regions where the standard is higher.

Similarly, gas furnaces in colder climates would have been required to operate at higher efficiency under the 2011 standards. In the northern part of the United States, that would translate to 90 percent efficiency or higher, an increase from the 80 percent level currently required of all gas furnaces.

However, even higher efficiency levels may well be cost-effective. Already, manufacturing advances mean some furnaces can convert as much as 98 percent of the natural gas they burn into usable heat. New strong, feasible and cost-effective efficiency standards like the ones NRDC promotes are the only way to ensure that consumers get the most energy savings and we look forward to working with DOE and stakeholders on the next round of standards and achieving, at long last, the highest possible efficiency standards for gas furnaces that are feasible and cost effective.