Colorado now requires lower-emission new furnaces and water heaters

DENVER (water heater) — HVAC experts are warning about a significant price increase in the cost of new furnaces and water heaters in 2026.

On Jan. 1, a new law went into effect in Colorado tightening the emissions standards on gas furnaces and water heaters. Units manufactured beginning Jan. 1, 2026 must meet Ultra Low Nox (ULN) or Energy Star ratings in order to be sold and installed in Colorado.

The law does not require Coloradans to immediately replace their existing furnaces and water heaters with upgraded equipment. However, when it comes time to purchase replacements, they must meet the new standards.

The change is meant to improve air quality in Colorado, cut down on pollution and help lower utility bills. However, experts expect upfront costs to be steep.

“The prices are going to change drastically for the equipment. There will be more limited choices and there will be more expensive choices only,” John Devillier, an HVAC professional in the Denver metro area, told FOX31.

Devillier said industry experts are expecting the cost of equipment to increase by at least 40% for homeowners and could skyrocket to more than 200% since lower-cost, standard appliances will be unavailable and high efficiency appliances will be in high demand.

“It’s going to make it to where you’re not going to be able to choose anything other than what they tell you to choose and that’s pretty much how it is for everybody across the board,” Devillier said.

Several local companies have published information on their websites to help educate customers about the changes.

VELPAX estimates homeowners will be paying between $7,000 to $12,000 or more to replace their furnace with ULN and Energy Star equipment. In comparison, the company says standard furnaces in 2025 cost $4,500 to $6,500, including parts and labor.

“I love the environment. I think that we should take care of the environment and we should be more efficient in the uses of energy, but also there’s a line where what is affordable for people,” Devillier said.

Another local company, Van Genderen Heating and Air, said on its website that the increased emissions standards will result in long-term savings for utility customers.

“Despite the higher upfront cost, ULN furnaces offer significant energy savings over time. With 95%+ efficiency, they reduce monthly heating costs and may qualify for rebates or financing options,” the company’s website said.

The law does not prohibit companies and contractors from selling through their current stock, even if it includes models that do not meet Colorado’s new emissions guidelines. Once standard equipment is sold out, it will no longer be available in this state.

“I suggest, if you feel like you’re going to need something or you’re concerned that you should do it sooner rather than later,” Devillier said.