Colorado Gas Furnace & Water Heater NOx Rules (2026)

If your furnace or water heater fails this winter, the replacement options are different from a few years ago. Colorado now limits the nitrogen oxide (NOx) emissions of new gas furnaces and water heaters sold in the state. Some contractors describe this as a "furnace ban" or a "heat pump mandate." It's neither, but it does change which equipment is available and what it costs.

This guide explains what the law requires, what it doesn't, how it interacts with ENERGY STAR and federal furnace rules, where Xcel's Clean Heat Plan and Denver's building rules fit in, and how to plan a replacement in 2026–2027. Everything here is current as of November 2026 and linked to its source. This is a general explainer, not legal advice.

What the law actually says

The rules come from House Bill 23-1161, "Environmental Standards for Appliances." Governor Polis signed it on June 1, 2023 (Colorado General Assembly). The NOx provisions are codified at C.R.S. 25-7-1504. Starting January 1, 2026, no one may manufacture, distribute, sell, offer for sale, lease or offer for lease a new covered product in Colorado if its emissions exceed these limits:

Sources: C.R.S. 25-7-1504; product scope per the HBA of Metro Denver bill summary.

Manufacturers test models using South Coast Air Quality Management District (California) test methods (C.R.S. 25-7-1505). They then certify compliance to the Colorado Department of Public Health and Environment (CDPHE) or label the product. CDPHE verifies compliance and the Attorney General enforces. ACCA reports civil penalties of up to $2,000 per violation, which fall on manufacturers, distributors and sellers, not homeowners.

Is this an AQCC "Regulation 7" rule?

No. You'll see it described as an Air Quality Control Commission rule, but the limits are written into state law. The law gives CDPHE a future role. By January 1, 2030, it must analyze whether greenhouse gas emissions from these products are falling in line with state goals. If they aren't, it must propose rules to the AQCC. It may also update standards and test methods to match other states. We found no AQCC rulemaking that has changed these residential limits as of November 2026.

What "ng/J" and "ultra-low NOx" mean

NOx forms when combustion heats nitrogen in the air. It's a precursor to ground-level ozone. The limit is measured in nanograms of NOx per joule of heat output. "Ultra-low NOx" burners hit low numbers by premixing gas and air and keeping flame temperatures down.

The 14 ng/J furnace limit isn't new. Southern California's air district held furnaces to 40 ng/J from 1984. It lowered the limit to 14 ng/J starting October 1, 2014 (SCAQMD). ACCA notes that Colorado is the first state to apply an ultra-low NOx standard to residential gas furnaces statewide.

What the law does not do

• It doesn't require you to replace working equipment. It covers new products offered for sale (KOAA, SWEEP FAQ).
• It doesn't stop repairs. Fixing your current furnace or water heater isn't affected. See our furnace repair page if yours is struggling.
• It doesn't ban gas furnaces. Compliant gas furnaces and water heaters are sold by the major manufacturers.
• It doesn't force out existing stock. KJCT and ACCA report that inventory on hand as of January 1, 2026 may still be sold. Once it's gone, it can't be restocked.
• It doesn't cover used equipment, according to SWEEP's FAQ on the bill.

The ENERGY STAR path, and why it changed in July 2026

The "deemed compliant" clause ties Colorado's law to a moving federal target: the most recent ENERGY STAR version for the product type. For gas furnaces, EPA's ENERGY STAR Version 5.0 took effect on July 31, 2026 (EPA program planning document). It raised the gas furnace requirement in the U.S. North, which includes Colorado, from 95% to 97% AFUE, with air leakage of 2% or less (ENERGY STAR criteria).

In practice, a new furnace sold in Colorado in late 2026 generally needs one of these:

1. a certified ultra-low NOx rating (14 ng/J or less), at any efficiency, or
2. current ENERGY STAR certification, which for gas furnaces now means about 97% AFUE or higher.

A 95–96% AFUE furnace that is neither ultra-low NOx nor ENERGY STAR V5.0 certified may not qualify, even though it's a condensing furnace. Ask your contractor which path a model uses and how they verified it. Don't assume "high efficiency" means compliant.

For water heaters, EPA describes ENERGY STAR gas water heater criteria as a high-efficiency, condensing-equivalent level. Heat pump water heaters need a UEF of at least 3.30 for standard integrated units. Electric heat pump water heaters have no onsite combustion, so NOx limits don't apply to them.

AFUE, condensing furnaces and venting: why compliance can change the install

AFUE (annual fuel utilization efficiency) is the share of the gas's heat that ends up in your home over a season. Many older Front Range homes have 80% AFUE furnaces that vent hot exhaust up a metal flue, often shared with the water heater. Condensing furnaces (90%+ AFUE) pull so much heat from the exhaust that water condenses out. They vent cool exhaust through plastic pipe, usually out a side wall or roof, and need a condensate drain.

So moving from an 80% furnace to a 97% ENERGY STAR model is more than a box swap. It can mean new venting, a drain line, and sometimes changes to how the remaining gas water heater vents. Ultra-low NOx versions of 80% furnaces exist and can keep the existing venting. Altitude matters too. SWEEP's 2023 FAQ notes some ultra-low NOx furnaces need a high-altitude conversion kit, and gas appliances must be set up for Denver's elevation. More on that in our altitude and Manual J guide.

Propane and mobile homes: the SB26-002 fix

The law's test methods were written for natural gas. ACHR News reported in March 2026 that Bradford White said no residential propane water heater on the U.S. market met Colorado's limits. That left an estimated 100,000 mostly rural households with few options. The legislature passed SB26-002, signed June 2, 2026 and effective August 12, 2026. It exempts propane water heaters and water heaters designed for mobile homes until January 1, 2031 (PHCC). Some industry coverage describes the exemption as covering propane-fueled products more broadly (BPN). If you heat with propane, confirm with your contractor how it applies to furnaces.

Key dates

The federal 95% furnace rule is in limbo

Separately from Colorado, a 2023 Department of Energy rule requires non-weatherized gas furnaces made after December 18, 2028 to reach 95% AFUE, which effectively means condensing only. The D.C. Circuit upheld it in November 2025. On June 8, 2026, the Supreme Court vacated that ruling and sent the case back for reconsideration (Contracting Business). DOE is also taking comment on a gas-industry petition to delay compliance to at least January 1, 2030 (Federal Register, April 27, 2026). For now the 2028 date stands, but it may change.

Colorado's Clean Heat Plan: what it is and isn't

The Clean Heat law, SB21-264, is aimed at gas utilities, not homeowners. It requires regulated gas utilities (Xcel, Black Hills and Atmos) to cut greenhouse gas emissions 4% by 2025 and 22% by 2030 from 2015 levels (Colorado PUC). The PUC was required to set a 2035 target by December 1, 2025. The Sierra Club reports it chose a 41% reduction.

Xcel's first plan was approved in June 2024. CPR reported regulators approved up to $440 million through 2027, with more than 70% aimed at efficiency and electrification. Clean Heat costs are generally capped at 2.5% of customers' annual gas bills unless the PUC makes specific findings. Xcel is due to file its next plan in 2026.

For homeowners, the practical effect is incentives, not mandates. Clean Heat money helps fund Xcel's heat pump rebates. Nothing in it requires you to remove a gas furnace. See our 2026 Colorado heat pump rebate guide for current amounts, including Xcel's October 2026 rebate cut.

Denver and Boulder: local building rules

Denver has electrification requirements for existing buildings in its municipal code (Sec. 10-20). According to CLASP's policy summary, they apply to commercial and multifamily buildings. When a unitary AC is replaced, the new equipment must be able to provide electric space heating, typically a heat pump. Exemptions exist for emergencies and economic hardship, but the hardship exemption isn't available when a heat pump is near cost parity with a like-for-like gas replacement. Large buildings (25,000 sq ft and up) also face Energize Denver performance targets. We found no Denver rule that requires a detached single-family home to install a heat pump when replacing a furnace. Denver's own code pages weren't accessible to our research tools, so confirm with Denver Community Planning and Development before you pull a permit.

Boulder and other cities set their own energy codes, and these change often. We couldn't verify current residential replacement requirements for Boulder from a primary source, so check with your city's building department. Your installer should know because they pull the permit.

What this means if you replace a furnace in 2026–2027

Cost and availability: what we know

• Advocate estimates (2023): SWEEP's FAQ estimated an ultra-low NOx furnace at about $600 more than a comparable model, plus $100–$200 for a high-altitude kit where needed. It put a high-efficiency furnace at about $400 more than an 80% model and an ultra-low NOx gas tank water heater at about $90 more. At the time, SWEEP counted 4,269 furnaces meeting the ENERGY STAR path. That count was under the older 95% ENERGY STAR level, so fewer qualify under V5.0.
• Contractor reports (2026): A Colorado Springs service manager told KOAA compliant equipment may run $7,000–$10,000 installed, versus roughly $5,000 for older non-compliant models. An HVAC instructor told KJCT that some distributors raised prices on existing inventory.
• Industry view: ACCA expects higher prices, fewer models and tighter supply. It also warns some owners may keep old equipment running longer.

These are market estimates and reports, not MrFixer prices. Real quotes depend on venting, ductwork, altitude setup and your home's load.

A practical plan

1. If your furnace is aging but working, get it serviced. Then get quotes for a compliant furnace, a heat pump and dual fuel before it fails, so you aren't choosing in an emergency.
2. Ask every bidder to name the compliance path (ultra-low NOx rating or current ENERGY STAR certification) and to show it on the spec sheet or AHRI/ENERGY STAR listing.
3. Price the venting. If a quote switches you to a condensing furnace, it should include new venting, the condensate drain and any water heater venting changes.
4. Compare against a heat pump with incentives subtracted. Run a Manual J, then compare. Our heat pump vs. furnace guide covers operating costs.
5. Check local permit rules, especially for multifamily or mixed-use buildings in Denver.

MrFixer Heating & Cooling, based in Castle Pines, installs and repairs furnaces, heat pumps and dual-fuel systems across the Denver metro. We'll lay out compliant gas and electric options side by side so you can choose. Free in-home estimates and financing are available. Call (720) 466-7983 or request an estimate.

Frequently asked questions

Did Colorado ban gas furnaces in 2026?

No. HB23-1161 requires new gas furnaces sold in Colorado from January 1, 2026 to emit no more than 14 ng/J of NOx, or to be certified to the most recent ENERGY STAR version. Compliant gas furnaces are still sold and installed.

Do I have to replace my existing furnace or water heater?

No. The law applies to new products manufactured, distributed, sold or leased in Colorado. Existing equipment can keep running and be repaired.

Is this an Air Quality Control Commission regulation?

No. The NOx limits are in state law (C.R.S. 25-7-1504), not an AQCC regulation. CDPHE must analyze these products' greenhouse gas emissions by January 1, 2030 and may then propose rules to the AQCC.

Does a high-efficiency furnace automatically comply?

Only if it is certified to the most recent ENERGY STAR version or has a certified ultra-low NOx rating. ENERGY STAR Version 5.0, effective July 31, 2026, requires 97% AFUE for gas furnaces in northern states including Colorado. Ask your contractor to show which path a model uses.

Are propane water heaters affected?

SB26-002, signed June 2, 2026 and effective August 12, 2026, exempts propane water heaters and mobile-home water heaters until January 1, 2031. Confirm with your contractor how it applies to other propane equipment.

Does Denver require a heat pump when I replace my furnace?

Denver's equipment-replacement electrification requirements (Municipal Code Sec. 10-20) apply to commercial and multifamily buildings, per CLASP's policy summary. We found no requirement for detached single-family homes, but confirm current rules with Denver's permitting office.