Gas furnaces are a common heating option for homes, apartments and commercial spaces. They are often coupled with air conditioners or heat pumps, achieving a combined heating and cooling system. Their energy efficiency is specified by the Annual Fuel Utilization Efficiency or AFUE, which indicates the percentage of heat extracted from gas combustion. For example, a 90% AFUE furnace with an input of 200,000 BTU/h will deliver 180,000 BTU/h of useful heating.

The ENERGY STAR program covers oil and gas furnaces with nameplate capacity of up to 225,000 BTU/h. To qualify for the ENERGY STAR label, a gas furnace must have at least 90% AFUE in southern states, and 95% AFUE in northern states. The unit must also have an electronically commutated blower motor, and air leakage of 2.0% or less.

Thanks to the Inflation Reduction Act passed in August 2022, some ENERGY STAR furnaces now qualify for a 30% federal tax credit, covering up to $600 in equipment costs. This incentive is available for many types of HVAC equipment, and the limit is increased to $2,000 for heat pumps and biomass stoves.

When Do I Need a High-AFUE Furnace?

There is a common idea that furnace efficiency is equivalent to furnace quality, but this is not always the case. There are excellent furnaces from top brands like Carrier and Trane, which are reliable and durable while being highly efficient. However, there are also low-tier furnaces with a high nameplate AFUE. The opposite also applies; you can find furnaces with a modest 80% AFUE, but an excellent track record in the HVAC industry.

High-AFUE furnaces are strongly recommended for properties located in cold climate zones, since they are subject to a high workload throughout the year. Consider the following example:

• Assume a commercial space needs 100,000 kBTU per year.
• An 80% AFUE furnace needs 125,000 kBTU (1250 therms) to deliver 100,000 kBTU of heat output, while a 96% AFUE furnace only needs 104,167 kBTU (1042 therms).
• At a price of $1.85 per therm, the 80% AFUE furnace spends $2312.50, while the 96% AFUE furnace spends $1927.70.

In this simplified example, the 96% AFUE furnace achieves the same heating output throughout the year (100,000 kBTU), while saving nearly $400 in gas bills.

There are applications where a lower-efficiency furnace can make sense financially. 80% AFUE furnaces use a single heat exchanger to extract heat from gas combustion, while 90-99% AFUE furnaces use a secondary heat exchanger to extract more heat. However, the secondary heat exchanger makes these furnaces more expensive, and the added cost only makes sense if lifetime gas savings are higher.

80% AFUE furnaces are often recommended for locations with mild winters, where the annual heating load is relatively low.  They are also a common option for rental properties, vacation homes and other properties that are not subject to a continuous heating load.

Local natural gas prices and incentive programs must also be considered when comparing furnace models. Even with reduced workload, a 90-99% AFUE furnace can be cost-effective if local gas prices are high. You may also find rebate programs for furnaces that exceed a minimum AFUE. Also, consider that ENERGY STAR furnaces with at least 97% AFUE qualify for the 30% tax credit introduced in January 2023.

Choosing Between Upflow and Downflow Furnaces

When comparing furnace models, you will also notice that many units are available in upflow and downflow configurations. Consider that warm air rises above cold air due to buoyancy:

• The blower in an upflow furnace benefits from natural convection.
• The blower in a downflow furnace must force warm air downward, opposing its natural movement.

For this reason, an upflow furnace will operate more efficiently than a downflow unit. However, consider that many furnaces are coupled with heat pumps and air conditioners, which share the same blower. In this case, having a downflow blower is beneficial since cool air falls naturally, while an upflow blower becomes less efficient.

To summarize, an upflow blower improves heating efficiency at the expense of cooling efficiency, while a downflow blower has the opposite effect. Downflow furnaces are effective in warm climates, where the extra air conditioning efficiency outweighs the lost heating efficiency.