Personal Finance

Efforts to improve the efficiency of natural gas furnaces have chilled

Natural gas furnaces, by far the most popular way to warm U.S. homes, should be a juicy target for new energy efficiency standards to lower heating bills.

But a 10-year federal effort to raise the minimum standard for gas furnaces, which hasn’t changed in decades, has so far missed its target.

What went wrong? It turns out plenty.

Missteps, disagreements and a lawsuit have derailed the effort. It now looks as if it will take several more years to implement a new standard.

“It’s a shame,” said Andrew deLaski, executive director of the Appliance Standards Awareness Project, which supports the tougher standard. “This is going to end up taking 20 years, and that is ridiculous.”

Energy efficiency is determined by how much energy stored in a fuel is used. Under the current standard for natural gas furnaces, the appliances must turn into heat at least 78 percent of the energy in each unit of natural gas.

The proposed standard would raise that to 90 percent for new furnaces installed in northern states, including Missouri and Kansas. The standard for southern states would remain essentially unchanged at 80 percent.

In an average residence, a furnace that is 90 percent or more efficient costs, with installation, an extra $600 to $800. But it can save $50 to $100 or more a year in fuel costs. And there are sizable environmental benefits because carbon dioxide emissions that cause global warming would be cut.

But critics of the proposed standard, while acknowledging the benefits, say it is deeply flawed. The more efficient furnaces need different venting from older gas furnaces, and in some installations the cost could outweigh the economic benefit.

Critics, which include some gas utilities and furnace installers or distributors, say another problem is the different efficiency standards for warmer and cooler climates, which would be difficult to enforce.

The U.S. Department of Energy earlier this year ditched the proposed standard, saying it would start from scratch and do more studies. Meanwhile, a lawsuit filed by an opponent of the standard is still in the courts.

Things became even more muddled when an association of air conditioning distributors intervened in the lawsuit, trying to stop some new efficiency standards for air conditioners slated to go into effect in 2015.

The federal agency has declined to comment because of the lawsuit.

The messy dispute is a setback for the federal government, which under President Barack Obama has made energy efficiency a priority.

Efficiency standards have already been increased for a range of appliances, from refrigerators to dishwashers. The minimum efficiency standards for central air conditioners and heat pumps have jumped about 30 percent over the last several years and are supposed to go up some more.

In July, the Department of Energy boasted of new requirements for microwave ovens that slash the amount of energy they use in standby mode by 75 percent.

Gas furnaces were a tempting target because, according to the Energy Information Administration, about 40 percent of the energy delivered to a residence over a year is for heating, and more than half of that is used in gas furnaces.

Their minimum efficiency was last raised by the National Appliance Energy Conservation Act in 1987, which set it at 78 percent.

Most furnaces sold now are at least 80 percent efficient. Ninety percent to 98 percent efficient models are available and accounted for a third of all gas furnaces sold nationally in 2012.

Efforts to boost the minimum began in 2002. Five years later the Department of Energy proposed raising the minimum to 80 percent, but energy efficiency groups sued the agency, saying the new standard was such a slight improvement it would have little effect.

Then in 2009 an advisory group to the Department of Energy that included furnace manufacturers and energy efficiency groups drew up another standard: New furnaces in the northern part of the U.S. would be at least 90 percent efficient, while in the rest of the country they could be 80 percent efficient.

The idea behind the regional standards was that the 90 percent furnaces would more than recover their costs in colder areas because they would save more energy.

The Department of Energy endorsed the agreement and issued the proposed standard in 2011, to go into effect this year. But it quickly ran into trouble.

Questions and complaints ricocheted. The opposition included two major associations representing gas utilities, which said the cost could cause some consumers to go to electric heat. Energy efficiency experts said that was unlikely.

Jim Hearing, director of sales and customer accounts for Missouri Gas Energy, said the utility’s profits don’t depend on customers using more gas. Its rates, which cover overhead expenses and profits, are based on a fixed monthly charge, while the wholesale price it pays for gas is passed along to the customer.

The utility offers rebates to customers who buy more efficient furnaces, and about half of furnaces sold in the region are 90 percent or more efficient.

But the decision to buy a more efficient furnace should remain voluntary, Hearing said.

“When it’s economically feasible for them, they’re going to pull the trigger,” he said. “You just can’t force people to do it.”

More efficient furnaces use more of the fuel’s energy, but that creates a problem when it comes to getting rid of what’s left. In a more efficient furnace, the exhaust is cooler and contains more moisture. That damages traditional vertical venting through the roof of a house.

A more efficient furnace avoids that by sending the exhaust through a plastic pipe out the side of the house.

The American Gas Association and American Public Gas Association, which represent investor- and city-owned gas utilities, said the extra work could be an unreasonable financial burden for some consumers.

The venting for the more efficient furnace would add a few hundred dollars to the cost. But the American Public Gas Association said that in some older homes and other installations the venting could cost $1,500 to $2,200, although it’s not clear exactly how often that would occur.

Talks among the parties ensued to find a compromise. A change was made so when the cost of installation rose too high, a consumer could get a waiver and not have to buy one of the more efficient furnaces.

Steve Burbridge, president of Anthony Plumbing, Heating & Cooling in Lenexa, said he has encountered homes where installing a more efficient furnace was too costly. But a waiver was a solution.

“I’m a big fan of energy efficiency,” he said.

There were signs that the American Gas Association, whose members are divided on raising the minimum efficiency, was softening its opposition. It had a choice of filing a lawsuit to stop the rule or working to try to make some changes in the final rule that was adopted.

“We chose the latter,” said Andrew Soto, vice president of regulatory affairs for the trade group.

But the American Public Gas Association did file a lawsuit. The group said the waiver was unworkable in part because of the training that would be required for furnace installers. The lawsuit was the last straw for the Department of Energy, which in a settlement earlier this year announced it would drop the proposed standard and start over.

The court where the lawsuit was filed still has to rule on accepting the settlement. American Public Gas Association officials say any new rule will have to be different. Perhaps it could just require the more efficient furnaces in new homes, where installation wouldn’t be a problem.

“We’re already preparing for the next round,” said David Schryver, an executive vice president for the trade group, which represents city-owned gas utilities.