Department of Energy Finalizes Reversal of Heating Efficiency Rollback

On December 29, 2021, the Department of Energy finalized a rule that reinstates a previous interpretation of energy efficiency rules pertaining to residential furnaces and commercial water heaters.

The December 2021 rule reverses a January 2021 rule that risked blocking future administrations from making gas-fired water heaters, furnaces, and boilers more efficient. Many gas-fired water heaters, furnaces, and boilers currently allow a significant amount of heat to be wasted through venting, but some models use condensing technology to capture heat and prevent waste. In 2018 a number of industry groups petitioned DOE to define condensing and non-condensing equipment as separate categories with separate efficiency standards. The January 2021 rule defined non-condensing technology, which requires venting, as a performance-related "feature" under the Energy Policy and Conservation Act that cannot be eliminated through adoption of an energy conservation standard. By creating two separate classes -- one for models with condensing capabilities and one for models without such capabilities -- DOE's January rule had limited future administrations' authority to require condensing equipment for all gas-fired water heaters, furnaces and boilers. The December 2021 proposal reinstates the previous interpretation and therefore allows DOE to require condensing equipment for all such appliances.