Heating our 1850's era farmhouse initially posed a bit of a challenge. Coming from a passive solar, super-insulated house that I built in Norwich in the 1980's--which used the equivalent of about 50 gallons of oil a year to heat--to a leaky old house that faced the road instead of south toward the sun, I knew we had a lot of work to do!
We started with an energy audit done by Building Energy. This gave us a prioritized list of energy improvements we needed to make. We focused on reducing air leakage by sealing every crack we could. We spray-foamed the basement's field stone walls with a non-toxic, soy-based foam, which both dramatically cut down air infiltration and provided insulation. We sealed every penetration into the attic and added 18" of cellulose. And we replaced the sieves that masqueraded as windows with triple-paned windows from Thermotech in Canada--the most energy-efficient windows we could find.
This reduced our heating demand to about 2 1/2 cords per year. Not bad, but knowing what I know now, I'd have spent some money increasing the insulation in the walls, too.
As much as I like the idea of burning Vermont-grown wood rather than fossil fuels like oil or propane, I'm still concerned about the nasty chemicals in wood smoke. So, we recently installed a cold-climate heat pump. This wall-mounted, ductless device works a lot like a refrigerator in that it uses electricity to extract heat from the outside air and moves that heat to the house. (A refrigerator takes heat from inside the food compartment and dumps it in the house.) Advances in technology have made it cost-effective to extract heat from outside air down to as low as -13°F. We're using our solar-generated electricity to power the heat pump, so we now can easily heat our house in the spring, fall, and on all but the coldest days in the winter without polluting the air. (Here's a short video from BrighterVermont.org on Cold Climate Heat Pumps.)