Battle lines form as DOE proposes rule for gas furnaces

By Christa Marshall | 09/06/2016 01:23 PM EDT

The Department of Energy proposed an efficiency rule just ahead of the Labor Day weekend that quickly sparked lawsuit threats from the gas industry and praise from environmentalists.

The Department of Energy proposed an efficiency rule just ahead of the Labor Day weekend that quickly sparked lawsuit threats from the gas industry and praise from environmentalists.

The proposed standard for residential gas furnaces is one of the most anticipated of the Obama administration, partly because it could achieve more energy savings than most recent rules. "The savings from this standard rank it as the biggest end use natural gas saver of any standard ever issued," the Appliance Standards Awareness Project said in a blog post.

The issue is also one that has played out in the courts. And it’s a point of contention in a major energy reform package under consideration in Congress. The gas furnace standard has not been updated since the early 1990s.


The new standard resembles one proposed by DOE last year, although this time the department is carving out a separate category for small furnaces that have an input capacity of 55,000 British thermal units per hour or less. Those furnaces would be subject to the existing efficiency standard of 80 percent. The aim with the two-tiered standard is to prevent people in warm climates or in smaller homes from paying high costs.

Other larger furnaces would have to meet a new efficiency standard of 92 percent, a metric of how much fuel in the furnace is converted to heat.

However, the American Gas Association is threatening a lawsuit if the language is not changed before the rule is finalized, saying the new threshold for small furnaces would leave a lot of people out.

"We and others in the industry are just deeply frustrated," said Kathryn Clay, AGA’s vice president of policy. There would not be a need for a lawsuit, she said, "if the department had a better process."

The problem with the 55,000 Btu threshold is that many households above that level won’t be able to install the more efficient equipment, Clay said. That includes as many as 15 percent of households, many of which are low-income or are in town houses and row houses where they don’t have access to four exterior walls, she said. For them, it wouldn’t make economic sense to install more expensive technology for small furnaces, and in some cases, it wouldn’t be technically feasible, she said.

As a result, some repairmen may try to keep older furnaces working longer, which can be dangerous and increase risks of carbon monoxide poisoning, among other things, she said. In other cases where it might be technically possible to install a 55,000 Btu furnace, it wouldn’t heat a home properly, Clay said.

The gas group isn’t opposed to the 92 percent standard for large furnaces otherwise. The industry would be more supportive of moving the small furnace threshold to 70,000 Btu to cover people currently in a technology "gap," she said. That would not stall the movement toward condensing technologies that achieve higher efficiency, the group says in comments.

The American Public Gas Association is also threatening a lawsuit. "The proposed rule will cause uneconomic fuel switching as many consumers — especially in southern states — will be compelled to change their natural gas furnaces to electric heat pumps," it said.

Stephen Yurek, president and CEO of the Air-Conditioning, Heating and Refrigeration Institute, added that the market for furnaces at or below 55,000 Btu per hour "is quite small for the simple reason that most U.S. dwellings require greater heating capacity. "

"Therefore, at the levels proposed by DOE in this rule, many of our customers, particularly in Southern states, will be forced to pay more for a larger, ultra-efficient furnace even though their monthly heating bill savings will not justify the higher purchase and installation costs," he added.

Greens hail proposal

But Andrew deLaski, executive director at the Appliance Standards Awareness Project (ASAP), said DOE carefully considered the threshold for small furnaces. Increasing the level above 55,000 Btu would wipe out much of the energy savings planned for the rule, he said. A level of 70,000 Btu could wipe out 40 percent of planned energy savings, he added.

The group said DOE projects that 85 percent of households are expected to install furnaces with a capacity greater than 55,000 Btu.

DOE addressed the concern raised by industry — the size threshold chosen by the department allows for inefficient furnaces in well-insulated, moderately sized homes in almost any climate, deLaski said.

"DOE has proposed a common-sense solution that’s backed up by their very thorough analysis," deLaski said. "I’m surprised the gas industry is threatening suit anyway — their knee-jerk response makes me think they were always going to sue, no matter what DOE proposed."

It’s a "myth" that many households wouldn’t be able install small furnaces, he said. "You can do a high-efficiency furnace in any home."

Town homes, for example, "can vent through the roof," he said about the allegation that some households can’t technically install more efficient equipment. AGA claims that many households couldn’t vent the new technology through the ceiling, short of a major renovation.

In a blog post, Elizabeth Noll of the Natural Resources Defense Council said a strong standard was important for renters who have no control over how efficient their furnace is because it was purchased by a landlord. "Given that a large portion of low-income households are renters, a strong standard will protect them from unnecessarily high energy bills," she said.

In its comments after Friday’s announcement, ASAP added that about 50 percent of furnace sales last year already exceeded the 92 percent efficiency level. DeLaski and other environmentalists are recommending that the standard for larger furnaces be increased to 95 percent.

The proposal would reduce U.S. energy use by 2.9 quadrillion Btu (quads) over 30 years of sales. In comparison, most efficiency rules issued last year would save less than 1 quad. The savings are large partly because space heating is the biggest source of residential energy use, said ASAP, which was formed by the American Council for an Energy-Efficient Economy, Alliance to Save Energy, Energy Foundation and NRDC.

The estimated reduction in carbon dioxide over the same period would equal about 143 million metric tons, or the equivalent of taking 30 million cars off the road. Consumers would save about $5.6 billion to $21.7 billion over 30 years, DOE said.

Long, hard fight

Updating the 1992 standard has led to years of DOE proposals and lawsuits.

Several years ago, DOE finalized a rule with a split standard of 90 percent efficiency in some regions and 80 percent in others. That prompted a lawsuit that was settled. DOE later proposed a national standard of 92 percent efficiency that was criticized for not exempting smaller furnaces and households in warm climate. The latest version adds the small furnace carve-out.

The battle over furnace standards is a sticking point in a major energy reform package now in a congressional conference committee.

Environmentalists are unhappy with the Senate version of the bill, which could make action on a final rule contingent on an advisory group convened by the secretary of Energy. That could delay things indefinitely, advocates say (E&E Daily, April 26).

The proposal heads to a comment period after it is formally listed in the Federal Register.

Currently, DOE is expected to finalize the standard this year. It is one of a dozen or so rules the administration is expected to address before January, including major standards on light bulbs and other appliances.

The administration has pledged to finalize efficiency rules that result in a reduction of 3 billion metric tons of CO2. Despite the critics, deLaski said he expected DOE to move next to a final rule.

It would "shock me" if they didn’t move to a final rule, he said.