The Department of Energy’s Intent to Eliminate Non-condensing Furnaces

By Mark Krebs -- July 7, 2022

“Electrification is a primary motive behind the Green New Deal (i.e., to ban fossil fuels regardless of the impact on the American economy).  If non-condensing furnaces are banned, it seems likely that DOE/EERE’s next step will be to move on with phasing-out condensing furnaces (i.e., all natural gas furnaces).”

“The good news is that the natural gas utility stakeholders along with consumer interest allies have already put DOE/EERE on notice that they will continue to resist in court (see here).”

The Department of Energy (DOE), through its Office of Energy Efficiency & Renewable Energy (EERE), is again planning to ban the manufacturing of non-condensing natural gas furnaces used in most American households. By intent, this will force consumers in the market for a new furnace to either purchase either a high-end condensing furnace or an electric heat pump.

However, considering how much more high-end condensing furnaces and heat pumps cost to install, in many cases, this could have the unintended consequence of forcing low-income consumers into less clean and less expensive alternatives, like purely electric resistance heating systems that have much higher utility consumption.  Another alternative is for consumers to keep repairing old furnaces rather than replacing them or use some sort of unvented space heaters.

Background

On June 13, EERE sent an email to subscribers titled “DOE Issues a Notice of Proposed Rulemaking and Public Meeting Pertaining to Standards for Consumer Furnaces.” Published online as a pre-publication Notice of Proposed Rulemaking, the NOPR was assigned docket number EERE-2014-BT-STD-0031, which looked up here shows what else has been published since. Sorting it from the newest, with documents posted on June 12 and June 14, thousands of pages of technical documentation appear that by design are undecipherable by independent stakeholders.

ACEEE Press Release: Foul Play

On the same day as DOE’s notice to stakeholders (June 13) , the American Council for an Energy-Efficient Economy (ACEEE) published its press release, liberally “enhanced” with “information” about how overdue this is and how great it would be for most consumers and the environment to finally get rid of non-condensing furnaces. That is, the kind that “nearly half of U.S. homes—about 50 million—are heated with.”

Other specific claims in ACEEE’s press release include:

• Reduce[d] costs for each affected household by nearly $500 over the life of a furnace
• Cut 373 million metric tons of carbon emissions over 30 years of sales
• The standard proposed by DOE would require furnaces to use about 15% less energy than the present minimum efficiency standard of 80%. This represents a big jump from a very basic non-condensing furnace to top-of-the-line non-condensing furnaces. Condensing furnaces require new ductwork and may force the conversion of “stranded” hot water heaters that shared existing ductwork.
• [T]he vast majority of consumers who would’ve purchased a non-condensing furnace would instead purchase a condensing furnace, while *most of the remainder would purchase an electric heat pump.

These claims indicate that ACEEE either had thoroughly analyzed DOE/EERE’s massive technical support documents (TSD) by the day of its release or DOE/EERE simply told them what it all meant.

If it is the former, then ACEEE was given early and exclusive access to DOE/EERE’s TSD. If it was the latter, then it is another demonstration of DOE’s preferential treatment of, and communications with, at least one preferred stakeholder over any others. 

In a previous rule for consumer furnaces, that was contested and ultimately settled, with DOE agreeing to withdraw its direct final rulemaking, it took the contesting stakeholders over six months and $500,000 to hire a team of subject matter PhDs and attorneys to decipher DOE/EERE’s technical findings.

Simple common sense precludes the proposition here that ACEEE figured it all out by themselves overnight. It appears more likely DOE/EERE continues to treat some stakeholders as “preferred customers” with a level of access that other energy stakeholders lack, and that objective observers might describe as clearly biased.  As my golfing buddies might say: par for the course.

Responding to ACEEE

Getting back to ACEEE’s above-listed bullet points, DOE/EERE’s analyses are based on life-cycle costs. This type of analysis gives DOE/EERE a lot of camouflage under which to manipulate variables and to game its data to achieve desired outcomes. In the case of the first bullet point, it looks like the $500 of lifecycle savings is based on a 30-year life. Many assumptions change over the course of 30 years. Regardless, $500/30 years = $16.66 per year. If ACEEE’s numbers are anything close to accurate, THIS IS NOT GOOD ENOUGH.

Condensing furnaces are a lot more expensive to install and maintain than non-condensing furnaces. If one 50-cent transistor fails on the motherboard (yep, condensing furnaces have computer motherboards), then the assumed $500 lifecycle savings can disappear, at least if the furnace is out of warranty. Assumed gas and electric prices can change as well. And so on and so on.

First, cost premiums used for top-of-the-line (95% efficient heat pumps) are also easily gamed. Additionally, consumers may be forced to pay more if an existing furnace fails at an inopportune time, like during a major cold spell as is often the case.

(Disclaimer: The gas utility industry and its allies have yet to fully analyze DOE/EERE’s morbidly obese, obtuse, and opaque technical documentation. Therefore, it is at least possible that ACEEE’s alleged benefits are faulty. If so, an update will be provided.)

What to Do?

Fortunately, in the real world, consumers can get competitive bids and estimate economics based on actual utility rates and consumption. That’s what I recently did and DOE/EERE should do. My economic analysis (Spire review for NAS ver FEB 102020) was provided to the National Academies of Sciences (NAS) panel for “Review of Methods for Setting Building and Equipment Performance Standards.” Anyone can follow my methodology. No “black box” software or “national lab” computer scientists necessary. Just get a quote from Home Depot or Lowes, for example.

My recommendation was that DOE/EERE start using this methodology, at least as a spot check. Alas, there was an election, and the NAS panel was ignored; like everything else from the previous Administration.

Bottom line: my real-world payback was poor. And that was for a “budget” condensing furnace. A high-end condensing furnace payback, like DOE/EERE is calling for, would be worse. But consumers who need a replacement heating system won’t have a choice in the matter or they must start heating with something else.

And maybe that will be a heat pump or maybe it will be electric resistance or worse (e.g., unvented propane or kerosene space heaters). Regardless, even heat pumps resort to electric resistance when it’s really cold, so this move is another step in the direction of achieving a clearly stated Biden Administration goal: electrification.

Electrification is a primary motive behind the Green New Deal (i.e., to ban fossil fuels regardless of the impact on the American economy).  If non-condensing furnaces are banned, it seems likely that DOE/EERE’s next step will be to move on with phasing-out condensing furnaces (i.e., all natural gas furnaces).

What Lies Ahead?

So now what? As with electric vehicles (EVs), the Biden Administration will try to force consumers into the electrification of furnaces. This is an immensely bad idea for an already over-stressed electric grid, and especially for renters and low-income consumers whose decisions are made by landlords.

The good news is that the natural gas utility stakeholders (along with consumer allies) have already put DOE/EERE on notice that they will continue to resist in court. See Energy Efficiency under Biden’s DOE: An Update for more information.

Another big part of the reason for this proposed regulation is to keep the already immense DOE/EERE bureaucratic apparatus (and their contractors) growing, regardless of adverse consumer impacts. DOE/EERE, along with their Green New Deal and electrification cronies literally justify their actions by claiming that keeping non-condensing appliances available in the market would halt efficiency improvements into condensing technologies (and beyond). Their technical justification for this claim, if there is any, is concealed then buried in thousands of pages of complex data, exclusive modelling, etc. 

As far as I have been able to ascertain, there is nothing in present Federal energy efficiency statutes that compels this sort of endless improvement, with the possible exception for revisiting minimum efficiency standards every six years. 

However, electric resistance heating is never revisited and still legal, and its full fuel-cycle efficiency is much lower than the lowest non-condensing furnace currently available. Also, electric resistance operating costs are way higher. Conversely, there is much in these statutes intended to prevent DOE’s disordered application of appliance efficiency standards.  If DOE moves forward, and the data in the TSD is unveiled and made known, I believe the proposal could never be found cost-justified if challenged in court. And it will be.

With this rulemaking, the current Administration and its DOE leadership team are again telling American consumers something analogous to buying a Tesla because of high gasoline prices.

As reported by Master Resource, in the 2011 Direct Final Rulemaking to outlaw non-condensing furnaces, the American Public Gas Association settled its lawsuit with DOE by allowing it to withdraw its rule banning non-condensing natural gas furnaces in 30 states.  My advice to the gas industry: Do not settle this time.

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Mark Krebs, a mechanical engineer and energy policy consultant, has been involved with energy efficiency design and program evaluation for more than thirty years. He has served as an expert witness in dozens of State energy efficiency proceedings, has been an advisor to DOE and has submitted scores of Federal energy-efficiency filings. 

Mark’s first article was in the Public Utilities Fortnightly a quarter century ago: “It’s a War Out There: A Gas Man Questions Electric Efficiency.” Krebs oeuvre at MasterResource can be found here.