In late December, the Department of Energy (DOE) published a rule updating energy conservation standards for gas-fired instantaneous water heaters to improve efficiency while balancing cost-effectiveness. The rule, developed with industry input over three years, is intended to drive innovation and reduce household utility bills. However, efforts in Congress to reverse this standard through the Congressional Review Act (CRA) raise important questions about energy efficiency, consumer affordability, and American manufacturing competitiveness.
The CRA allows Congress to review and overturn regulations issued by federal agencies. While regulatory oversight is critical, undoing this rule could have unintended consequences.
Balancing Efficiency, Affordability, and Market Growth
Today, many tankless water heaters are imported from South Korea, China, and Japan, with approximately 1.48 million units coming from abroad. However, the high-efficiency tankless water heater industry supports over 700,000 U.S. jobs, strengthening a $211 billion economic impact across manufacturing, distribution, and installation. Ensuring American manufacturers remain competitive in this sector is critical for long-term energy leadership.
At the same time, consumer concerns about affordability must be taken seriously. More efficient models often come with higher upfront costs, and while they offer long-term savings on utility bills, the initial expense could be a barrier for many households. For example, installing specific high-efficiency units may require upgrades to venting or gas lines, further increasing costs. While homeowners will likely recoup these costs over time, the transition may be challenging—particularly for low- and middle-income households.
A Path Forward: Supporting Both Efficiency and Consumer Choice
Rather than fully repealing the DOE standard, a more balanced approach would focus on:
- Affordability Measures – Exploring rebates, tax credits, or financing options to help consumers manage upfront costs.
- Consumer Choice – Ensuring that multiple product options remain available so homeowners can select models that best fit their needs.
- Regulatory Certainty for Industry – Providing a stable, predictable regulatory environment that encourages American innovation and competitiveness while avoiding unnecessary disruptions to manufacturers and suppliers.
The Right Focus for Policymakers
Republicans and Democrats alike should aim to strike a balance between innovation and affordability. President Donald Trump recently announced his DOE would review the gas water heater rule and other Biden administration policies. While re-examining the rule is appropriate, outright repeal could create more problems than it solves by undermining domestic manufacturing and long-term energy savings.
A thoughtful middle ground that supports efficiency while providing affordability measures for consumers is the right path forward.
Policymakers may find their time better spent focusing on removing burdensome regulations while allowing market-driven innovation to thrive.