Colorado hits pause on ultra-low NOx rules for propane

When Colorado’s ultra-low nitrogen oxide (NOx) standards for residential furnaces and water heaters took effect on Jan. 1, 2026, they were meant to close a chapter on one of the state’s most ambitious indoor-appliance emissions rules. Instead, they opened a new one.

Within months, lawmakers were back at the Capitol passing SB26-002, legislation that carves propane-fueled equipment – along with appliances built for manufactured homes – out of those standards until Jan. 1, 2031.

The original mandate, House Bill 23-1161, required any new gas-fired furnace or water heater sold or installed in Colorado to meet ultra-low NOx emissions limits modeled on standards long used by California’s South Coast Air Quality Management District. The goal was straightforward: NOx is a precursor to ground-level ozone and smog, and metro Denver has some of the worst ozone pollution in the country, with the Front Range’s ozone nonattainment area chronically failing federal health-based limits. Proponents framed HB23-1161 as a way to squeeze pollution out of home heating equipment the same way it had been squeezed out of cars and power plants.

But the rule ran into a supply problem that regulators hadn’t fully priced in. Compliant, ultra-low NOx equipment scaled up relatively quickly for natural gas systems, where manufacturers had a large national market to justify retooling production lines. Propane-fired units were a different story. Because propane combusts differently than natural gas, ultra-low NOx propane furnaces and water heaters required separate engineering, and manufacturers hadn’t brought comparable models to market in volume. The same bottleneck hit equipment built for manufactured homes, a smaller, more specialized product category. The result, once the mandate took hold, was that compliant propane products began disappearing from Colorado shelves – a problem for the roughly 186 million gallons of propane sold in the state annually, much of it to rural households, manufactured-home communities and other customers with no natural gas hookup as an alternative.

That gap is what SB26-002 addresses. Sponsored by Sens. Tony Exum and Cathy Kipp, with Reps. Elizabeth Velasco and Jenny Willford carrying it in the House, the bill’s core mechanism is an exemption: Propane-fueled heating and water-heating appliances, and appliances made exclusively for manufactured homes, are excused from the Colorado Department of Public Health and Environment’s ultra-low NOx emissions standards until 2031. The bill also pushed back, by three years, a federal Infrastructure Investment and Jobs Act cash-fund appropriation deadline – an unrelated fiscal housekeeping provision folded into the same measure, titled broadly as “Energy Affordability.”

Notably, the bill did not emerge purely as an industry counterattack on climate policy. The Southwest Energy Efficiency Project (SWEEP), a regional clean-energy advocacy group that supported the original ultra-low NOx push, worked directly on the SB26-002 amendment once it became clear that compliant equipment for propane and manufactured-home systems simply wasn’t available in the marketplace. SWEEP has described the deal as a targeted, time-limited fix intended to preserve the integrity of Colorado’s broader appliance-efficiency framework rather than gut it – a five-year runway for manufacturers to catch up, not a permanent carve-out.

The Colorado Propane Gas Association (CPGA), which lobbied hard for the change, tells a more triumphant version of the story. CPGA Executive Director Tom Clark has called the bill’s passage a win for “consumer choice and energy affordability,” pointing to the disruption rural and manufactured-home customers faced when compliant propane units simply weren’t for sale. The bill passed the legislature on May 13 and was sent to the governor.

For now, the practical effect is narrow but significant: Propane furnace and water heater buyers in Colorado can continue purchasing standard equipment through the end of 2030, without the added cost and limited model selection that ultra-low NOx compliance would have imposed. Natural gas furnaces and water heaters remain subject to the original 2026 ultra-low NOx mandate.

Gordon Feller is a Global Fellow: The Smithsonian Institution; a White House appointee of a federal commission advising the U.S. secretary of energy; and an adviser to U.S.-based companies.

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