US DOE Mandates 95% AFUE Gas Furnaces by 2028, Reshaping Home Heating Market
US: Nearly half of all U.S. households rely on gas or propane furnaces, but under a new federal mandate from the U.S. Department of Energy (DOE), all non-weatherized gas furnaces must achieve a 95% Annual Fuel Utilization Efficiency (AFUE) rating by late 2028, reshaping home heating market. The DOE estimates the transition will save consumers approximately USD 24.8 billion in utility costs over 30 years and avoid 332 million metric tons of carbon emissions. Currently, many older furnaces operate at 70%–80% efficiency, meaning 20%–30% of fuel energy is lost through exhaust. By comparison, an 80% AFUE unit converts 80 cents of every dollar into heat and wastes 20 cents, while a 95% AFUE furnace converts 95 cents into heat with only 5 cents lost. The new standard effectively bans the production of 80% AFUE furnaces after 2028, impacting a segment that accounts for around 55% of the natural gas furnace market. Although industry groups challenged the rule, the U.S. Court of Appeals for the D.C. Circuit upheld the 95% standard in late 2025, and as of early 2026, the case is under petition for Supreme Court review, with the compliance deadline unchanged.
For HVAC contractors, the rule means noncondensing furnaces cannot be sold or installed after 2028, with additional regulatory pressure already visible in states such as California and Colorado. In Colorado, House Bill 23-1161 introduced new emission standards effective January 1, 2026. Low-NOx 95% AFUE models can cost 40%–80% more than older units, leading to higher installation bills and potential structural retrofit expenses, as condensing furnaces require specialized drainage and venting systems. While homeowners are not required to immediately replace functioning systems, any post-2028 replacement must meet the high-efficiency standard. The changes also extend to water heaters and commercial rooftop units. With the average gas furnace lifespan at 15–20 years, a significant share of existing 80% AFUE units will reach end-of-life soon after 2028, pushing households to choose between upgrading to a 95% efficient gas model or investing in full electrification, such as heat pumps, which in 2026 average over USD 15,000 for whole-home installation before incentives.
Source: BHpioneer
