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Saving the Economy, One Furnace at a Time

by Paul Rogat Loeb


Like most Americans, I’m guarding my dollars, but when my furnace died during Seattle’s coldest winter in decades, I needed to replace it. And when I did, with a high-efficiency Trane model made in Trenton New Jersey, the costs and gains underscored key lessons about what we need to do to craft a stimulus package that actually builds for America’s future. My new furnace saves energy and fights climate change. It promotes American jobs, and pays back its costs in a reasonable time frame. It points toward how to genuinely renew America’s economy instead of encouraging the same consumption for consumption’s sake that has helped create our current problems.

Let’s look at what my $5,000 purchased. It supported Trane’s factory workers in New Jersey and in their main plant in Tyler, Texas, supported local Seattle installers, and supported beleaguered New Jersey, Texas, and Washington state and city governments through the sales tax I paid and the taxes paid by the companies involved. In my personal economy, it meant I’ll save more than a third of my yearly gas bill and a commensurate amount of my CO2 emissions. My old furnace was a thirteen-year-old 70% efficient model that was down to barely 60% because single-cycle furnaces lose 1% a year as their burners corrode and heat exchangers get less efficient. The new one is 97% efficient and will maintain far more efficiency because its variable speed motor is much easier on its components. I live in a relatively small and well-insulated house in a generally temperate climate, and I keep my thermostat low, but I’ve still been spending $850 a year on gas heat (solar panels take care of most of my hot water), and if I add in savings on my electric bill from the furnace’s extra-efficient fan, I’ll save roughly $340 a year at current gas prices, and more as fossil fuels of all kinds become scarcer. If natural gas costs continue to increase at their recent rate, 61% in the past five years, my investment will pay back in roughly nine years—a far better and safer return than I could get from any bank account or roller-coastering stock market investment. If I lived in a colder climate or had a larger or less-insulated house, the furnace would pay off sooner still. I’ll also prevent the release of roughly three tons of CO2 every year.

So how do we make similar choices affordable for everyone, whether or not they have the savings to do this on their own? Imagine if the pending stimulus package helped people make such investments nationwide, combining direct incentives with low or no-interest loans, along the lines of those long advocated by Al Gore. Imagine if it prioritized energy efficiency and investment in renewables, particularly those that are American-made.

I’m not saying high-efficiency furnaces solve all our economic or environmental challenges. Plugging building leaks, adding insulation and switching light bulbs give the maximum energy efficiency for the least expenditure of dollars. We need solutions that move us toward eliminating fossil fuel use altogether, like solar thermal, industrial-scale wind, advanced geothermal, ultra-efficient green buildings, and smart electrical grids. The 300,000-person Swedish city of Malmo already gets 40 percent of its residential heat (and 60 percent of its electricity) from a municipal incinerator plant and is steadily extending its district heating to the suburbs. We could do the same. But adding a high-efficiency furnace buys time—like scrapping a Hummer to drive a Ford Focus. It takes us part of the way--and if the furnaces are American-made, does so while keeping money in our domestic economy. If we could replace every furnace older than 10 years with a high-efficiency model, and mandate the same in new construction, we’d come out far ahead.

Every industry is hurting these days, and they all have their hands out. But if we spend 700 billion or a trillion dollars to jumpstart the economy without simultaneously addressing root problems like fossil fuel dependence, we may not have the resources to do so later on--or when we do, they’ll require far more sacrifice. My furnace upgrade was from necessity, but it symbolizes a fundamental choice about the direction of America’s economy, and therefore about the stimulus package aimed at reviving it.

We can continue to support consumption for its own sake, and that’s what we’ve been doing. But although $5,000 granite countertops look swell, they don’t solve global warming, heal our trade deficits, or move us toward a more sustainable society. Nor do endless truckloads of Chinese Wal-Mart goods for those at the bottom or the $3,000 suits, $100,000 necklaces, and fifteen-million-dollar mega-mansions for those at the top whose choices have steered us into our present crisis. At some point, we need to shift incentives and priorities. We probably need fewer people working at mall stores, and more manufacturing furnaces or wind turbines and retrofitting houses. Even if this means we won’t be able to buy as many cool toys as some Americans did during the boom, we’d actually be investing in the future instead of cannibalizing it. If we make enough of these investments we might even look back on this moment as a national turning point—much as we do now to the wise choices made during a comparable economic challenge, from which we emerged with a far stronger and more equitable economy than ever before.

Paul Rogat Loeb is the author of The Impossible Will Take a Little While: A Citizen's Guide to Hope in a Time of Fear, named the #3 political book of 2004 by the History Channel and the American Book Association. His previous books include Soul of a Citizen: Living with Conviction in a Cynical Time. See To receive his articles directly email sympa [at] with the subject line: subscribe paulloeb-articles

Image credit: Flickr/Andrew Morrell

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The ROI is *much* higher.

Suppose a model at 70% efficiency costs $4000 and the model at 97% costs $5000, you can view it as a $1000 investment. With $250 yearly savings, the cash return is 25%, which is an outrageously high return for a low-risk investment.

Cash is only part of the story: if you sell your house, the value is higher with a high efficiency furnace.

Posted by: Daniel Haran on 13 Jan 09

That's a very good point Daniel. Any investment in high-tech alternative energy/high-efficiency, fixtures on houses will not only pay themselves back in a few years, but they will raise the value of your home considerably. This is something more people should consider.
Finally... when a simple issue like the efficiency of home furnaces is viewed in context of the larger economy like here then you come to realize that Al Gore really should have been president.

Posted by: Arno Hayes on 14 Jan 09

I commend you on your purchase. As someone who works directly in building energy efficiency I know you have made a smart decision about your home based on your particular circumstances. That said I want to share not a criticism but a variation on your thinking. I do residential energy audits daily and very rarely do i recommend replace a furnace or boiler for these reasons:
1. furnaces and boiler wear out in about 20 yrs. properly installed insulation and air sealing will last 50 yrs +
2. there are usually higher return on investment options available than replacing a heater. again insulation, air sealing (not windows)
3. insulation and air sealing reduce heating load meaning that a smaller furnace can be installed. take this idea to the extreme and you get a passive house.
4. about 2/3 to 3/4 of the cost of insulation, such as cellulose is labor. so when i suggest that someone re-insulate their attic with loose blown cellulose after its been air sealed 75% of the total cost of the job stays in my community and benefit my neighbors.

again the furnace is not a bad investment at all but i would much rather see a stimulus package that promotes insulation and air sealing vs installing a new furnace or boiler.

as a side note I have found that unfortunately ROI is VERY rarely the metric that homeowners use to make decisions about home energy improvements. I wish it was because I have a degree in economics but all of my fancy spread sheets showing ROI don't help much. Comfort sells services and installation much more than savings. I wish it wasn't so but that's been my experience.

Posted by: thomas on 14 Jan 09

thomas: so would your advice be that if the furnace is functioning, leave it be and when it dies replace it with a high-efficiency model?

Posted by: Daniel Haran on 14 Jan 09

The thing that's bothered me *most* about what everyone is saying about the failing economy is that the underlying issues—I.E., the roots of the problems and not just the symptoms—have been ignored in favor of artificial "aid" in the form of dollars.

It's easy to just blame everything on the Bush administration and think things will get better with him gone, but it's not that easy. The economic woes of today are years and years and years of unsustainable practices both in business, environment, etc.

Posted by: Tony on 18 Jan 09

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