Furnace Standard Analysis 

Discussion Document
Assessing and Quantifying Effects of 

a New Furnace Standard

• Using field intelligence and thoughtful analysis –

assess and quantify the effects a regional or national 

condensing standard for natural gas furnaces could 

have on energy efficiency and environmental 

objectives.

 Provide insight on the potential impact limiting customer 

choices for heating systems could have on overall energy 

usage, cost, and carbon emissions outcomes.

 Provide all data, models and sources of information to 

DOE and other stakeholders, to gain their confidence in 

the analysis and demonstrate full transparency.

2
Demonstrate the need for DOE to 

incorporate similar analyses in 

new minimum efficiency 

standard proceeding for natural 

gas furnaces.

Desired Outcome

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4

Industry 

Commitment 

to Efficiency
Natural gas usage per household 

has decreased even as overall 

demand for energy has risen. This 

trend is due in part to installation 

of tighter-fitting windows and 

doors, better insulation, utility 

sponsored energy efficiency 

programs, and the development 

of increasingly more efficient 

natural gas appliances.

5

Residential Natural Gas Use:

An Efficiency Success Story
States with Non-Volumetric 

Rate Designs

6
Step 1: Enhance Field Intelligence by 

Engaging Builders and Contractors

• Need: A study to evaluate the potential impact a new minimum efficiency 

standard for natural gas furnaces could have on the distribution of heating 

systems and fuel types in the new construction and replacement markets.

• Objective: To gather intelligence from home builders and HVAC contractors on 

how they would change their approach to providing heating and water heating 

system proposals if a condensing standard was established for furnaces. 

• Approach: Develop, administer, collect and analyze a nationwide survey 

designed to capture current fuel and technology choices for heating and water 

heating systems as well as the anticipated fuel and technology choices under 

two scenarios.

1. A non-condensing furnace minimum standard

2. A condensing furnace minimum standard

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-10 0 10 20 30 40 50

All

West South Central

Pacific

Mountain North

West North Central

East North Central

Middle Atlantic

New England

South Atlantic

East South Central

Mountain South

Percentage of Change in Heating/Water Heating Systems – Gas to Electric 

Regions

Electric Water Heater Electric Heat Pump Electric Resistance Heat

Survey results indicate a condensing furnace standard would cause 

a sizeable change in the type and energy source of heating and 

water heating systems installed
9

Comparison of Residential Space Heating Appliances

DOE/NAECA Efficiency 7.7 HSPF 9.0 HSPF 99 AFUE 80 AFUE 94 AFUE

Full-Fuel-Cycle Energy 

Use per Year*

96 MMBtu 89 MMBtu 156 MMBtu 68 MMBtu 52 MMBtu

CO2e** Emissions/Yr* 5.9 Metric 

Tons

5.5 Metric 

Tons

9.5 Metric 

Tons

4.5 Metric 

Tons

3.5 Metric 

Tons

Annual Cost $1,119 $1,029 $1,806 $714 $544

Electric Heat Pump 

Electric

Resistance

Furnace Natural Gas Furnace

• Excludes A/C operations

** Includes greenhouse gas impact from unburned methane July 2014 version
10

* Based on National Averages
Step 2: Analyze and Measure the Impact of 

Survey Results on Energy Efficiency Metrics

• Need: Demonstrate the market impact the contractor survey results would 

have on key energy efficiency metrics.

• Objective: To develop a credible and transparent model that quantifies the 

potential impact on key metrics energy efficiency standards are intended to 

address.

• Approach: Build a “Case Study” model that incorporates key market data 

and findings from the builder and contractor survey as inputs. The output 

from the model will identify the potential impact on the following metrics 

using furnace shipment data for a single year:

1. Annual consumer energy costs

2. Annual source energy usage 

3. Annual CO2 emissions

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Key Variables and Inputs Used in Impact 

Analysis Model

Market Data

• National furnace shipments data

• Regional furnace stock data

• Annual consumption data for gas 

furnaces by furnace category and 

region

• Annual consumption data for gas 

storage water heaters by region 

• Annual consumption for electric heat 

pumps, furnaces and water heaters 

by region

• Factors for converting site energy 

consumption to primary energy 

consumption by region

• CO2 emissions factors for energy 

source and region

AGA/APGA Studies Data

• Survey results on current distribution 

of furnace installations by category of 

furnace and region

• Survey results on potential changes 

in heating system installations and 

fuel source by region

• Survey results on potential changes 

in water heating system Installations 

and fuel source by region

• Marginal rates for electric and gas 

consumption by region

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Regions Considered in the Analysis – Based on U.S. Census Regions
Model indicates a condensing furnace standard would 

increase overall energy costs* when contractor survey 

results are considered in the analysis

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-$40,000

-$30,000

-$20,000

-$10,000

$0

$10,000

$20,000

$30,000

$40,000

$50,000

Overall Change in Annual Energy Costs (Thousands)

Change in Consumer 

Energy Costs without 

using Survey Results

-$35.9 Million

$44.9 Million

Change in Consumer 

Energy Costs using 

Survey Results

* Energy costs calculated using marginal natural gas and electricity rates.
15

-$15,000

-$10,000

-$5,000

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Change in Energy Costs without

using Survey Results

Change in Energy Costs using

Survey Results

West South 

Central

Mountain 

North

New England

East South 

Central

Mountain 

South

Middle 

Atlantic

South Atlantic

West North 

Central

East North 

Central

Pacific

(Thousands) 

Potential Impact of a Condensing Furnace Standard on Consumer Energy Costs* 

By Region ($/Year)

* Energy costs calculated using marginal natural gas and electricity rates.
Model indicates a condensing furnace standard would 

increase source energy usage when contractor survey 

results are considered in the analysis

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-4,577,695

463,844

-5,000,000

-4,000,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

Dth

/Yr

Change in Primary 

Energy Usage without 

using Survey Results

Change in Primary 

Energy Usage using 

Survey Results
17

-2,000,000

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

Change in Source Energy Usage

without using Survey Results

Change in Source Energy Usage

West North using Survey Results

Central

Mountain 

North

East North 

Central

Middle 

Atlantic

New 

England

Pacific

West South 

Central

South 

Atlantic

East South 

Central

Mountain 

South

Potential Impact of a Condensing Furnace Standard on Source Energy Usage 

By Region (Dth/Year)
Model indicates a condensing furnace standard would 

increase CO2 emissions when contractor survey 

results are considered in the analysis

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-280,618

348,589

-400,000

-300,000

-200,000

-100,000

0

100,000

200,000

300,000

400,000

Tons of CO2/YR

Change in CO2 

Emissions without 

using Survey Results

Change in CO2 

Emissions using 

Survey Results
19

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

250,000

Change in CO2 Emissions without

using Survey Results

Change in CO2 Emission using

Survey Results

West 

South 

Central

New 

England

East 

South 

Central Mountain 

South

South 

Atlantic

Middle 

Pacific Atlantic

Mountain 

North

West 

North 

Central

East

North 

Central

Potential Impact of a Condensing Furnace Standard on CO2 Emissions 

By Region (Tons CO2/Year)
What We Have Learned

• Contractor and builder survey responses indicate changes in heating and water 

heating system choices would be expected if a national or regional condensing 

furnace standard was established

oTwo primary factors driving the change include:

First cost premiums (equipment and installation) for natural gas condensing

 furnaces

Installation issues (venting and condensate disposal) associated with natural

 gas condensing furnaces

• Changes in system choice would conflict with our commitment to: 

oHelping customers save money

oHelping improve the efficiency of how we use energy

oHelping the nation achieve the objective of lowering emissions

• It is important to understand the regional impacts of changes in system choice

oEight out of the ten regions see substantially diminished benefits and 

increased costs

oImpacts are especially significant in northern regions of the country.

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Contractor/Builder Survey

Methodology and Results 

Impact Analysis Model

Assumptions and Inputs

Model Outputs

Solutions for Overcoming

Installation Challenges

Preventing Unintended

Consequences from Standard

Discussion
American Gas Association

400 North Capitol St. NW

Washington, DC 20001

(202) 824-7000

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