Federal bill lifts ban on certain gas-fueled instant water heaters

The U.S. Senate passed a resolution that would revoke a ban on non-condensing natural gas water heaters last week.

The reversal of U.S. Department of Energy’s (DOE) Final Rule establishing Standards for Gas-Fired Instantaneous Water Heaters was supported by trade groups who argued the policy would increase prices for customers.

The National Association of Home Builders (NAHB) said gas is still a significant energy source for appliances and that the Biden administration’s policy was part of a broader agenda to phase natural gas appliances.

“The Biden-era rule’s impact on the water heater market set a dangerous precedent for further restrictions on natural gas appliances, and ultimately it would make it harder for home owners to maintain affordable living standards,” said NAHB Chairman Buddy Hughes.

In December 2024, the DOE announced a rule that would ban non-condensing gas-fired tankless water heaters starting in 2029. The goal was to improve energy efficiency and reduce emissions.

Non-condensing water heaters vent heat outside, wasting some energy.

Condensing water heaters use the heat from exhaust gases, making them more efficient.

But consumer groups argue the policy roll-back will ultimately cost consumers more.

The DOE standards would require tankless heaters to be 13% more efficient than the current least efficient models. The rules would have reduced the annual cost for a household by $112 over the life of the appliance, cumulatively saving $3.1 billion, according to the Appliance Standards Awareness Project (ASAP).

The group said about 60% of new tankless units already meet the standards, and all major water heater manufacturers sell such models. The standards would affect less than 10% of all gas water heaters sold because tankless units are a small portion of all gas water heater sales, ASAP said.

The Plumbing-Heating-Cooling Contractors–National Association (PHCC) said the federal decision leaves open questions about how future equipment will evolve without the mandate.

“It is an open question as to what the market effect will be when other water heater products reach higher mandated efficiency standard levels—with their corresponding increased product costs—when compared to baseline instantaneous products that now have fixed minimum efficiencies and related costs,” PHCC said.