November 22, 2007
Heating Furnace Efficiency Mandates And Comparison Of Heat Sources

The US federal government isn't doing much to improve home heating furnace energy efficiency.

Under the new rule, the US Department of Energy (DOE) in 2015 will require nonweatherized gas-fired furnaces the kind most used for home heating to be 80 percent energy efficient. That's up from the current mandate of 78 percent.


But that slight uptick won't have much impact on natural gas use since 99 percent of furnaces sold are already at that level, industry data show.

The manufacturers didn't want to be forced to a higher minimum standard since that would make the cheapest gas burning furnace more expensive. That would cause them to lose some sales to heat pumps, oil furnaces, and other heat generators. Well, the industry got its way.

My guess is a higher standard would have been cost justifiable. I especially suspect that since I expect natural gas prices to go up faster than the overall rate of inflation.

Under the DOE's new efficiency standards, consumers will save $700 million and prevent 7.8 million metric tons of carbon dioxide from wafting into the atmosphere, over 24 years, DOE says. Had DOE instituted a 90 percent standard, consumers would save at least $11 billion and prevent the release of 141 metric tons of CO2 over the same time period, according to separate analyses from the American Council for an Energy Efficient Economy as well as Dow Chemical and the Natural Resources Defense Council.

Some states (at least Maryland, Vermont, Massachusetts, and Rhode Island) impose higher standards. So how much more do gas furnaces cost in those states?

Various heating devices come at more than one efficiency level. For example, heat pumps from the same manufacturer come at different efficiency levels. So if you want to get a new furnace or heat pump make sure you compare and consider how much efficiency you gain in the more expensive models.

I found a web calculator page for comparing cost effectiveness of different heating methods. Note that their default values for the energy sources are from a few years back and you need to put higher costs in for just about every energy source. For electricity use 10 cents per kwh or use the number for your state in that chart or check your electric bill. At the time of this writing heating oil in the US is averaging $3.21 per gallon. For propane the cost is $2.43 per gallon. At those prices a ground source (geothermal) heat pump is about a fourth the cost of oil or propane per BTU of generated heat. At least in the Baltimore area natural gas is going for about 92 cents per therm. That makes natural gas less than a third the cost of oil for heating. Geothermal heat pumps produce the most heat per dollar spent on energy inputs than other sources. But geothermal heat pumps also cost the most for initial installation ($18,000.00 to $35,000.00).

In colder climates where natural gas is not available the geothermal heat pumps already pay back quickly enough. Plus, since heat pumps run off of electricity their operating costs won't go up as fast as oil or natural gas. Natural gas prices are going to rise as US and Canadian natural gas production declines and as more users of oil shift to natural gas. But I do not expect the inflation rate for electricity to be as high as the inflation rates for oil or natural gas. Electricity has a long run cost ceiling that isn't much higher than the cost of electricity today because nuclear power only costs about 2 cents a kwh more than coal. Though electricity prices can go higher when fossil fuels start running out and before a lot of nuclear plants and wind towers can get built. But once oil production starts declining the cost advantage of using electricity to drive heat pumps will become much bigger.

Space heat and hot water account for about 4.9% of US oil usage. So a replacement all oil furnaces by geothermal and air heat pumps would reduce US oil usage by almost 5%. This is a shift that will pay for itself in dollars saved.

Update If you are considering putting in a wood boiler furnace regulatory risk should be a consideration. Many municipalities are restricting or banning wood boilers as heat sources due to air quality concerns.

Concerned about air quality and neighborhood disputes, Hampden joined a growing number of communities nationwide setting their own rules on the increasingly popular wood boilers, which are not federally regulated. The U.S. Environmental Protection Agency recommends emissions and air quality standards, but does not regulate where and when the wood-fired burners can be installed or used.

Rules are patchy on the state level, too.

Some states, including Connecticut and Maine, have regulations and let their municipalities adopt even stricter limits or ban the boilers altogether. Massachusetts has considered statewide rules but has not enacted them, while Michigan offers a model ordinance that local governments can adopt in the absence of statewide standards.

More sparsely populated rural areas are less likely to regulate the use of wood for heat. So if you have few neighbors you probably have minimal regulatory risk from spending $10,000 to $15,000 on a wood furnace. Though once fossil fuels production declines the rising demand for wood for both heating and biomass energy conversion will probably drive up prices of wood. My guess is electricity doesn't face as much upside price risk as wood.

Update: Migration of heating to geothermal heat pumps should be treated as an urgent matter. Why? See the October 23, 2007 CalTech lecture by Matthews Simmons "Is The Future Of Energy Sustainable" (PDF format). The production of oil is going to go into steep decline. We need to shift in advance as many processes as possible away from oil before that decline becomes steep and highly disruptive.

Update II: Also read the excellent Simmons Bermuda presentation (PDF format).

Share |      Randall Parker, 2007 November 22 11:01 PM  Energy Heating

Rob said at November 23, 2007 10:06 AM:

Randall, am I just a retard? How can a complete burn be any less than 100% efficient? Isn't all the energy turning into heat?

Randall Parker said at November 23, 2007 10:23 AM:


No, like me you are only a partial tard. ;>

Leave aside the exact phrasing since the English language leaves so much room for ambiguity. What causes less than 100% efficient heating when burning fossil fuels?

1) Heat goes up the exhaust pipe. Heat exchangers can reduce this. But there's still loss.

2) The fossil fuels do not burn totally.

3) Electricity gets used to pull in and move around air.

Otherwise, what did you think of the post? I'm thinking a lot about energy lately since Peak Oil seems like it is either on us or approaching pretty soon. So I'm writing a lot more about energy lately. I'm open to suggestions for topics and questions people want answered and areas for making practical suggestions.

Jerry Martinson said at November 23, 2007 3:40 PM:

A major and often overlooked consideration with a natural gas furnace is it's sizing. Most installed furnaces have a Btu/hr rating that is far higher than what the house's heating load actually is. If your furnace is too big, it either short cycles, or you end up setting the thermostat too high because the temperature keeps dipping in exterior rooms because the air hasn't been moving around. The quoted AFUE efficiency doesn't account for short cycling your furnace. How much is this effect exactly? Unfortunately, there is little research on this but I've seen estimates that the typical practice of having a 100kBTU/hr furnace when a 40kBTU/hr furnace will suffice reduces efficiency by 20% and hedonic efficiency by another 10%.

When you get an HVAC guy in your house to replace your furnace, they'll typically recommend a bigger furnace than necessary. This is because of two major reasons:

1. They make more money if they oversize your furnace since bigger furnaces cost more
2. If they screw up and under-size the furnace, you'll be very mad at them in February. There's no penalty to them if they over-size the furnace.

There's a method to calculate the right replacement size for your furnace that is far better than what the HVAC tables suggest, using your latest winter heating bill:

The problem is that the HVAC guys use a table "schedule J" that will usually oversize your furnace by 2x. Sizing a furnace this way is only appropriate _for a new house_ not one where one can determine the actual heating load.

So here's a typical dilemma that HVAC guy will tell you:

$1500 for 82% AFUE standard furnace versus $2500 for 94% AFUE furnace. Higher efficiency is then basically a 20 year payback. But both are actually going to run 60% efficient or less due to excessive short cycling since your actual use doesn't match the AFUE test cases.

But if they size the furnace 1/2 as big, you'll pay only $1000 for your new 82% AFUE furnace and it will actually run about 70% efficient, both saving you money up front and saving you money down the road.

It is really stupid that with a huge energy department with billion-dollar research budgets that we can't size HVAC right in the field. This is actually worse for cooling than heating. I've seen some estimates from RMI that oversizing HVAC has wasted at least $1 trillion dollars in the United States alone.

Brett Bellmore said at November 23, 2007 3:50 PM:

3) isn't a source of inefficiency, since the motion of the air eventually gets turned into heat anyway. Inefficiency for just about everything but wood comes down to #1. The less efficient wood burners actually do let some of the fuel go unburned up the stack as flammable volatiles.

My ever rising heating bill has led me to do a bit of research into ground source geothermal. I found two downsides:

1. I live in one of the two townships in the entire damned state that ban open loop ground source. Great, I've got an aquifer under my house connected to the Great Lakes, and I can't dump the water from it into the river behind my house. No, stupider, I can, I just can't extract heat from it first. Merely running the hose is perfectly legal.

2. The capital cost is quite high, if you don't use open loop.

By the way, I should point out that wood furnaces only run upwards of $10,000 plus if you go the hot water route. Your standard indoor forced air wood burner is a half to a third that price.

What really puzzles me is that nobody seems to offer an absorption style geothermal heat pump.

Randall Parker said at November 23, 2007 4:49 PM:

Jerry Martinson,

Optimal furnace size: Can't a furnace run at less that full speed?

Think about fall and spring when the furnace doesn't need to run full out anyway. Why not just operate continuously at less than full blast? Don't the mechanisms for feeding oil or natural gas have any variability to the feed rates? To provide that variability is NOT rocket science. Nor should it be particularly expensive.

Brett Bellmore,

Geothermal heat pumps: Would you mind telling which prices you are finding out as potential prices for geothermal heat pumps?

Have you gone to your township elected officials and asked them why this restriction?

Optimal furnace size: Seems to me ideally for comfort the air flow should be continuous with only the amount of heat getting injected and the air speed varying as needed. Basically, heat should be injected as fast as it is lost.

External water boiler wood furnace: A friend just got one installed for $13000. He lives in a rural of Canada and so his regulatory risk is very low.

Jerry Martinson said at November 23, 2007 5:17 PM:


There are some "two-stage" furnaces that do indeed reduce the severity of the issues that I'm talking about. However, they cost quite a bit more and the thermostat interface is rather primitive.


JMG3Y said at November 23, 2007 7:13 PM:

The Matthew Simmons link is incorrect.

Randall Parker said at November 23, 2007 7:57 PM:

JMG3Y, Thanks for pointing that out. The link is now fixed.

Jerry Martinson said at November 23, 2007 10:56 PM:


I was wondering specifically what the concern of your local water board (or whatever it is called where you are) has with the geothermal well water exchange system that you desire to build. I can see very big potential problems with having a new set of cowboy well-diggers creating vertical conduits everywhere in a potable drinking water source. However, it wouldn't be hard to say that geothermal well-water exchange systems need to be installed by someone with a well-digger's license and have to be registered and documented with the water board. What problems can a properly installed residential geothermal system possibly cause? Is it just your water board being stupid or is there a legitimate reason?


Brett Bellmore said at November 24, 2007 4:18 AM:

Open loop systems such as the local township board have prohibited do not threaten water quality in the aquifer, because they don't put the water back into the aquifer, they dump it at the surface. They ARE capable of drawing down an aquifer which isn't being adequately replenished, but that's scarcely a concern in the "Thumb" area of Michigan. Water is about as far from being a scarce resource in this area as it's possible to be without drowning.

Based on my previous interactions with that lot, somebody probably told them that "water is a precious resource, which shouldn't be wasted", and they enacted the ordinance in a spasm of self-congratulatory environmentalism without taking into account the local hydrology.

Rob said at November 24, 2007 9:00 AM:

Thanks Randall,

I knew heat pumps can be "more than 100% efficient" (The thermodynamics are bit beyond me right now)

Amory Lovins at Rocky Mountain institute, ( has interesting stuff on upping efficiency. His big thing is that the incentive structure for builders does not encourage efficiency. I have also seen some banks that provide lower interest loans for more efficient homes. I would assume that banks are not huggy-feely-environmental types and have determined that either the people who up their efficiency are less likely to default, or that more efficient homes in and of themselves save money.
I think I've seen somewhere a concept kitchen that moves waste heat to increase efficiency.

PS I got into the LEAP program for a masters in engineering at Boston University. So, with any luck, I'll get a masters in engineering.

Randall Parker said at November 24, 2007 9:10 AM:


Kitchens: Cooking seems like a very energy inefficient activity. My stove oven (and any others I've looked at) has no real insulation. So the heat leaks out at a fast rate. Also, pots on a natural gas stove get heat coming up at them from a burning flame. How much of that heat gets transferred to the pot versus going up around it?

Electric heat can be generated inside a sealed container - unlike natural gas that needs oxygen. So in a properly insulated container would electric heating do more cooking per unit of heat used? Suppose we burn some natural gas in an electric generator plant and then deliver that electricity to a house to heat up a really well insulated oven to cook a turkey for a few hours. Is that more energy efficient than using the natural gas to heat a conventional oven?

Heat pump efficiency for heating: Remember that heat pumps are just air conditioners flipped around. They make one side hotter by making the other side colder.

Congratulations on the Boston U acceptance. I'm hoping as you advance thru that degree you'll gain insights into energy efficiency issues. It is timely right now to have those insights.

Rob said at November 24, 2007 11:43 AM:

Thanks Randall,

Heat pump: I can't do the math from a standing start.

Energy efficiency ideas: I have lots of ideas in general, most are probably unviable or already done, but I tend not to post my ideas, as I have dreams of patents and starting a company, but don't have the capacity now to pursue much.

I recall reading or hearing about a mapquest-like program that will determine fuel-efficient driving routes. W/out much traffic, they got a 10% reduction in fuel use, and with typical congestion, estimated about 5%. That'd be great: it has no upfront cost beyond changing habits.

Even if we weren't hitting peak oil, it seems that more of the existing oil is in countries with very high time-preference, and they are not maintaining the extraction infrastructure, choosing to milk the wells know to compensate for Malthusian growth.

harry said at June 5, 2013 12:45 AM:

Concerned about air quality and neighborhood disputes, Hampden joined a growing number of communities nationwide setting their own rules on the increasingly popular wood boilers, which are not federally regulated.

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