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Colorado banned standard 80% furnaces and most gas water heaters in 2026. Denver homeowners face 40–80% higher prices and tight supply — here's what HB23-1161 means for you.
If you've shopped for a new furnace or water heater in Colorado recently, you may have already noticed: the options look different, the prices are higher, and some equipment you could buy a year ago is no longer available. That's not a supply chain hiccup or inflation. It's the direct result of Colorado House Bill 23-1161 — a law that took effect January 1, 2026, requiring all new gas furnaces and gas water heaters sold or installed in Colorado to meet Ultra Low NOx (ULN) emission standards.
As an HVAC company serving the Denver Metro Area for over 16 years, our team at MoJo Home Services has been preparing for this transition since the law was signed in 2023. We want every Colorado homeowner to understand what this law means, why it's affecting prices and product availability, and what your options are — whether your system is running fine today or it's been making that worrying noise all winter.
What Is Colorado's Ultra Low NOx Law (HB23-1161)?
Colorado House Bill 23-1161 was signed by Governor Polis in June 2023 and became enforceable on January 1, 2026. The law targets nitrogen oxide (NOx) emissions — a class of air pollutants produced by gas combustion that contribute to ozone formation and respiratory health risks. Denver residents are familiar with the brown cloud inversions that settle over the city during cold winter months, trapping pollution in the valley. The law is part of a broader effort to improve Front Range air quality.
Under HB23-1161, any new gas furnace or gas water heater sold, supplied, or installed in Colorado after January 1, 2026 must either:
Meet Colorado's Ultra Low NOx emission limit of 14 nanograms per joule (ng/J), or
Be ENERGY STAR certified under the current EPA specification
This effectively eliminates the standard 80% AFUE non-condensing furnaces that have been the workhorse of residential heating for decades. Traditional 80% furnaces — with their open combustion chambers and metal flue venting — cannot meet the 14 ng/J threshold. They are no longer being manufactured for the Colorado market, and any remaining pre-2026 inventory will not be restocked once depleted.
Why Colorado Is Almost Alone — and Why That Creates a Supply Problem
Here's the part that surprises most Denver homeowners when we explain it: Colorado is one of the only jurisdictions in the entire country with this requirement. The South Coast Air Quality Management District in Southern California — covering Los Angeles and surrounding counties — has had similar Ultra Low NOx rules for water heaters for several years. California's Bay Area Air Quality Management District is moving toward zero-NOx requirements for new appliances starting in 2027.
But as a statewide mandate covering both furnaces and water heaters? Colorado stands nearly alone. No other U.S. state has enacted this requirement at the state level. That distinction creates a serious market problem that directly affects Denver homeowners right now.
Major appliance manufacturers — Carrier, Trane, Lennox, Rheem, A.O. Smith — design their production volumes around national demand. When a single state of roughly 6 million people requires a specialty product that no other state has legislated, manufacturers have limited incentive to invest in large-scale production. The result is a market that has been slow to adapt:
Constrained product selection. Ultra Low NOx compliant furnaces and water heaters exist — but in far fewer models, sizes, and configurations than what the pre-law market offered. Specific BTU sizes or brand preferences may be harder to source quickly.
Longer lead times. Ordering a specific unit may require waiting days or weeks, rather than pulling from local distributor stock as was common before 2026.
Significantly higher prices. Specialty manufacturing, lower production volumes, and strong Colorado demand have driven installed costs up 40% to 80% compared to pre-law pricing. A furnace that cost $4,500–$6,500 installed in 2024 may now run $7,000–$12,000 for a comparable compliant unit. This isn't price gouging — it's basic supply and demand in a constrained, Colorado-specific market.
These dynamics will not fully normalize until either more states adopt similar requirements (building national manufacturing scale) or manufacturers make a larger commitment to the Colorado market. Neither appears imminent.
What Happened to the 80% Furnace?
The standard 80% AFUE gas furnace dominated Colorado residential heating for 30+ years. It's a simple, proven design: a heat exchanger, an atmospheric burner, and a metal flue that vents combustion gases out through the roof or sidewall. Low upfront cost, minimal installation complexity, and decades of reliable performance made it the default choice.
As of January 1, 2026, no new standard 80% AFUE furnaces can be sold or installed in Colorado. Any contractor installing non-compliant equipment after that date is in violation of state law and faces permitting issues. If you currently have a working 80% furnace, you are not required to replace it — HB23-1161 applies to new sales and installations, not existing systems. But the moment that unit fails and needs replacement, you will be selecting from the new ULN-compliant market, at ULN-compliant prices, with ULN-required installation changes.
One important technical distinction: efficiency rating and NOx emissions are separate measurements. A furnace can achieve 90–95% AFUE without meeting Colorado's NOx limit. Both criteria must be satisfied — a high-efficiency condensing furnace that doesn't carry Ultra Low NOx certification is still non-compliant under HB23-1161. Our team verifies compliance on every unit we recommend and install.
Gas Water Heaters Are Affected Too — and Most Homeowners Don't Know It
This surprises many Denver homeowners: Colorado's Ultra Low NOx law covers gas water heaters as well as furnaces. Traditional natural draft water heaters — the tank units with an open-top vent and standing pilot light — cannot meet the 14 ng/J NOx emission limit. They are no longer available for new installation in Colorado.
Compliant alternatives include power-vent models, direct-vent units, and tankless gas water heaters that use sealed combustion. These are available and effective, but again — more expensive to purchase, more involved to install, and in tighter supply than the pre-law market. Installation costs for a new water heater have also risen meaningfully, with some installations requiring new venting runs and electrical connections for modern power-vent controls.
If your water heater is more than 8–10 years old, this deserves a place in your planning. Emergency water heater failure — cold showers have a way of accelerating decisions — means paying current market prices for whatever inventory is available that day. Proactive replacement gives you time to compare compliant options and budget for the full installed cost. Read our full checklist on what HVAC techs say to do before a freeze for a comprehensive preparedness guide that reflects the new market reality.
Who This Affects Most: Homeowners in Thornton, Englewood, Westminster, and Wheat Ridge
Our service area runs from Thornton and Westminster in the north to Englewood and Littleton in the south, with the bulk of our customers in Denver proper, Wheat Ridge, Arvada, and Lakewood. Across these communities, we service a wide range of equipment ages and conditions.
The homeowners in the most time-sensitive position are those with:
Furnaces 15 years or older. Average furnace lifespan is 15–20 years with proper maintenance. At 15 years, you're statistically inside the replacement window. A proactive replacement — while you can plan, compare equipment, and budget appropriately — is far better than an emergency call during a January cold snap.
Any working 80% AFUE furnace. When this unit fails, there is no like-for-like replacement under current law. The sooner you plan for the ULN transition, the more control you have over timing, equipment selection, and cost.
Natural draft water heaters older than 8–10 years. The same logic applies — plan the transition rather than react to a failure.
Homes with metal flue or B-vent venting systems. These homes will require venting modifications as part of any new condensing furnace installation. Knowing that upfront changes your cost planning significantly.
Denver's unique altitude adds another layer to equipment selection. At 5,280 feet, combustion efficiency is reduced, and ULN-compliant condensing units need to be properly sized using Manual J calculations rather than rule-of-thumb BTU estimates. Our article on how Denver's elevation impacts HVAC performance explains why altitude-adjusted sizing matters for every furnace installation on the Front Range.
How MoJo Home Services Is Navigating This Transition
We've spent the past two years building distributor relationships focused on ULN-compliant inventory and developing installation protocols for the new generation of compliant heating systems. Our NATE-certified technicians are fully trained on condensing furnace installations — PVC venting, condensate drain lines, sealed combustion water heater requirements, and proper altitude-adjusted sizing using Manual J load calculations.
We also work with Xcel Energy Colorado rebate programs and can identify which ULN-compliant units qualify for utility rebates. Combined with federal IRA tax credits (up to $600 for qualifying ENERGY STAR furnaces), there are meaningful financial incentives available for homeowners who choose the right certified equipment. We'll walk you through what applies to your specific situation — not a generic estimate.
For an overview of the best ULN-compliant and high-efficiency furnaces available in the current Denver market, see our breakdown of the top furnaces for Denver homes in 2026. We also provide installation and service for compliant water heater replacements throughout the metro area.
Your Denver Heating Partner Through the ULN Transition
Colorado's Ultra Low NOx law is in effect, the market has changed, and the dynamics around product availability and pricing are real. The homeowners who will navigate this most successfully are those who plan ahead — who assess their current equipment's age and condition now, understand what a compliant replacement will realistically cost, and make decisions on their own schedule rather than in the middle of a system failure.
MoJo Home Services has been serving Denver Metro homeowners for over 16 years. We are NATE-certified, EPA-certified, and BBB-accredited — and we've made it our mission to guide customers through exactly these kinds of market transitions with honest advice, compliant installations, and no surprises on the final bill.
If you want to understand where your current system stands and what a ULN-compliant replacement would look like for your home, let's start that conversation before it becomes an emergency. Contact MoJo Home Services today to schedule a system assessment — we serve homeowners throughout Denver, Wheat Ridge, Lakewood, Aurora, Arvada, Westminster, Thornton, Englewood, and the surrounding Denver Metro Area.
Sources & References
Colorado General Assembly — HB23-1161: Environmental Standards For Appliances, 2023
KJCT8 News (Grand Junction) — New Colorado Law Requires Lower-Emission Furnaces, Water Heaters Starting January 1, December 2025
Bay Area Air Quality Management District (BAAQMD) — Building Appliances Rule Implementation, 2023
Alpine Building Performance — Why Furnace & Water Heater Replacements Cost More in Colorado Starting in 2026, alpinebuildingperformance.com, February 2026
U.S. Environmental Protection Agency — ENERGY STAR Furnace Certification Requirements, energystar.gov, 2025
Air Conditioning Contractors of America (ACCA) — Manual J Residential Load Calculation, 8th Edition
Need a ULN-compliant furnace or water heater in Denver? MoJo Home Services provides expert installation of Ultra Low NOx certified heating equipment throughout the Denver Metro Area. Contact us at 4000 Newman St, Wheat Ridge, CO 80033 or call (720) 807-4050 for a free system assessment and installation quote.
Frequently Asked Questions
What is Colorado's Ultra Low NOx furnace law?
Colorado House Bill 23-1161, signed in 2023 and effective January 1, 2026, requires all new gas furnaces and gas water heaters sold or installed in Colorado to meet Ultra Low NOx (ULN) emission standards — specifically, nitrogen oxide emissions no greater than 14 nanograms per joule (ng/J). Alternatively, equipment can qualify if it carries current ENERGY STAR certification from the EPA. The law does not require homeowners to replace working equipment, but it determines what equipment can legally be installed as replacements going forward.
Is Colorado the only state with this Ultra Low NOx law?
Colorado is one of the very few jurisdictions in the country with a statewide Ultra Low NOx mandate for both furnaces and water heaters. The South Coast Air Quality Management District in Southern California has had similar Ultra Low NOx rules for water heaters for several years, and California's Bay Area Air Quality Management District is moving toward stricter requirements for new appliances. However, no other U.S. state has enacted this requirement statewide for both product categories. This geographic isolation is a primary reason product supply is constrained and prices are significantly elevated in Colorado compared to national averages.
Can I still buy a standard 80% AFUE furnace in Colorado?
No new standard 80% AFUE furnaces are being manufactured for the Colorado market. Some pre-January 2026 inventory may still exist with certain distributors, but that supply is finite and will not be restocked. Any contractor installing non-compliant equipment after January 1, 2026 is in violation of state law. If your existing 80% furnace is still operating, you don't need to replace it — but when it fails, your replacement will need to be a ULN-compliant or ENERGY STAR-certified unit, installed with any venting modifications required by the new equipment.
Why are furnace and water heater prices so much higher in Colorado right now?
Colorado's Ultra Low NOx requirement applies to one of the smallest markets in the country with this type of rule. Major furnace manufacturers — Carrier, Trane, Lennox, Rheem — design production volumes for national and international demand. Building a specialty compliant product line at scale for one state requires investment that manufacturers have been slow to make. The result: limited product selection, longer distributor lead times, and prices that are 40–80% higher than pre-law equivalents. A furnace that cost $4,500–$6,500 installed in 2024 may now run $7,000–$12,000. This is expected to normalize slowly as more states potentially adopt similar rules.
Does the Ultra Low NOx law affect gas water heaters too?
Yes. Colorado's HB23-1161 covers both gas furnaces and gas water heaters. Traditional natural draft water heaters — with an open-top vent and standing pilot light — cannot meet the 14 ng/J NOx emission limit and are no longer available for new installation in Colorado. Compliant alternatives include power-vent, direct-vent, and tankless gas water heaters using sealed combustion. These are available in Colorado but in tighter supply and at higher cost than before the law took effect. If your gas water heater is older than 8–10 years, proactive planning for replacement is strongly advisable.
Will I need new venting when I replace my furnace under the Colorado ULN law?
In most cases, yes. Most ULN-compliant furnaces are condensing units that vent through PVC pipe rather than a traditional B-vent metal flue or chimney. If your current system uses a metal flue, your installation will require new PVC exhaust and intake pipes — typically routed through an exterior wall or rim joist. In Denver, our technicians assess each home's existing venting infrastructure during every estimate, as some chimneys can be repurposed while others will be decommissioned. Venting modifications typically add $300–$800 to the total installed cost and are included in every estimate we provide — no surprises.
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