Heating systems have come a long way since the invention of the fireplace, often combining a furnace, an air conditioner and a ventilation system all in one.  Since these systems are typically installed by a single mechanical contractor, we refer to them as HVAC: Heating, Ventilation and Air Conditioning; although depending on climate not all systems are always present.

The traditional idea of burning something to heat the home is deeply ingrained in most people's minds, and often has a romantic appeal, especially in the case of fireplaces.  Unfortunately most of the fuel we burn is of the unsustainable variety: oil, natural gas and propane.  To further compound this problem, homes are often poorly insulated, don't take advantage of solar energy and don't use their fuel particularly efficiently.

The first step in designing an HVAC system is to design the house so that an HVAC systems is hardly needed at all by using a very well insulated structure and utilizing the available solar energy and passive cooling strategies (see solar).  In this scenario, the HVAC is used largely for ventilation and as a backup during extreme weather.  Money spend on avoiding the use of HVAC systems can be offset by savings in installing a smaller system than would otherwise the necessary, reducing the up-front costs as well as saving fuel.

Fuel Types

Energy suppliers like to advertise the virtues of their particular fuel and the bad side of their competition, both in terms of price and environmental qualities.  While some fuels do indeed create more pollution than others, the difference between them isn't as big as the difference in not burning fuel at all!  Here is a brief overview of them:

Electricity - often the most expensive, but the price varies around the country greatly.  If generated from renewable sources (i.e. wind or solar), electric is a very environmentally friendly power source, but unless that power is generated locally, there is a large loss in delivering the power to the customer.  Since most electric in this country is generated by burning either coal or gas at a 40% conversion efficiency, even if the power lines had no loss, it would be a terrible use of fuel.  Nuclear power avoids the problems of burning fuel, but has a host of its own problems, especially disposal of the resulting high-level waste.  Nuclear power has so many political problems and few proponents so that even if nuclear power plants could be safe and the disposal problems solved, its not likely the public will easily accept them, especially when many of us believe there are safer, lower cost ideas anyway (e.g. solar electric and wind).  Hydroelectric generation also avoids burning fuel, but disrupt ecosystems significantly and only function until the reservoir fills up with silt.  A good compromise would be to leave some rivers without dams, while sacrificing others, but the current state of the US is that virtually every river has many dams on it resulting in the decimation of species dependent on free flowing water (e.g. salmon in the Northwest).

Oil - since almost everyone drives a gasoline powered car, we are all regularly aware of the price of oil.  Although heating oil isn't the same price as gasoline, it is usually close since it is created from the same raw material, crude oil.  Ever since the OPEC oil embargo of 1974, we are all aware that the United States is a net importer of oil, and for some it gave a hint that we could actually run out.  Determining how much oil there is in the world is tricky because you have to first know how much you're willing to spend to get it out of the ground, and second you estimate based on the probability of much is there. The oil industry like to say that the world's "proven reserves" have gone up in the last 20 years, but in fact the majority of that isn't due to new discoveries of oil, but changing the probability that a given amount can be found from the standard practice of using a 90% probability to some much lower probability. 
(see http://dieoff.org/page140.htm or Scientific American, Mar 1998 for an in-depth article on cheap oil).

Natural Gas - there is so much demand for natural gas, that it is no longer a cheap fuel and is about the same price per amount of energy as oil.  Like all fossil fuels, there is only so much natural gas, but determining how much is complex and controversial (see discussion under Oil, above.)

Propane - used mainly by rural customers without access to natural gas, propane is made from crude oil and so have all the same problems.

Coal - a historically dirty fuel, coal is rarely used as a heating fuel anymore, if for no other reason, people don't want to shovel ashes out periodically.  Assuming we could have "clean coal" burning, coal would be as acceptable as any other fossil fuel.

Wood - if harvested sustainably with care for habitat protection, wood can be an environmentally friendly energy source, although most wood burning units generate large quantities of pollution.  Wood only burns cleanly when it is quite dry and burned very hot.  If wood is not harvested locally, the fuel spent delivering the wood must be added to the total fuel used.  Wood is typically cut with a gasoline powered chain saw and split with a gasoline powered hydraulic splitter, further reducing its sustainable attribute.

Fuel burning .vs. distribution
When considering a heat source, there are two aspects to look at: the fuel burning process and the method of distributing the heat. The choice of fuel often limits the methods of burning it, and sometimes the methods of distributing it.

Methods of burning fuel

Furnace - burning oil, natural gas, propane, coal, or electric a furnace heats air up.  Old style furnaces consume air from inside the house, while newer ones have a separate vent to bring in outside air to support the burning.  Older furnaces are may be a little as 50% efficient, but all newer ones (called mid-efficiency) are at least 80%.  A high efficiency (sometime called condensing) furnaces are over 90% efficient, but often cost much more.  Early units had reliability problems because the condensing section of the furnace produces highly acidic water that must be disposed of properly.  Forced air furnaces heat the air hot enough to "cook" the dust in the air, with some negative health consequences.

Boiler - similar to a furnace, but heating water instead of air.  Boilers can combine heat and hot water in one unit, and can be more efficient in cases where only a small amount of heat is required (since starting a furnace is the least efficient part of the cycle, heating a large tank of water avoid excessive cycling).

Fireplace - burning wood and exposed to the air in the room.  Fireplaces are at best about 10% efficient, but are often take more heat out of the house than they put in due to burning a lot of the air in the house and sending it up the chimney, only to be replaced by cold air leaking into the house from elsewhere.  People love sitting by the fireplace, but from an environmental point of view, sitting in front of a wood stove with a glass door is much preferable!

Wood/Gas stove - burning wood, natural gas or propane, the burning process is contained, and so isolated from the room. Modern stoves often at least have the option of using outside air to burn the fuel.  Older wood stoves are not especially efficient (although much better than fireplaces) and highly polluting.  Newer ones have a hi-tech design the results in very efficient combustion (around 80%) and are much cleaner burning, but in order to get truly clean combustion, a wood fire must be very hot.  In an energy efficient home, so little fuel must be burned that an efficient wood stove would quickly overheat the house.

Masonry wood stove - invented in various forms in northern European countries in the 1700's to make more efficient use of a scare wood source, masonry stoves fit well into energy efficient homes because they allow for the rapid burning of wood (hence hot, clean burning) while also capturing a very high percentage of the heat generated.  Masonry stoves combine an efficient firebox design with a long series of passages for the smoke to pass through in order to capture all the heat of combustion before it goes out the chimney.  Unlike most other methods of burning fuel, the idea behind a masonry stove isn't to heat the air, but to heat the brick the stove is made out of.  While a fireplace or woodstove give off heat mostly only when they are burning fuel, a masonry stove is designed only to burn for a short while (1-3 hours) and letting the masonry give off heat when the fire is out.  As with any thermal mass system (see thermal mass), the more mass the stove has, the longer it takes to heat it up.

Baseboard Electric Resistance - electric can be converted to heat with a high efficiency (ignoring the efficiency of generating the electric in the first place), electric baseboard heaters have a lowest initial cost.  They are often found on low cost construction and in additions where it was difficult to extend the existing heating system to the new addition.  Like furnaces, baseboard heater "cooks" any dust in the room, potentially producing some quantity of toxic compounds.

Heat Pumps - a heat pump is essentially a refrigerator run in reverse, and operates exactly as its name indicates; it moves heat from outside to inside.  Because heat pumps move heat, they can produce more heat than could otherwise be obtained with the energy to run the heat pump, and so are measured by how much better they are just burning the fuel and collecting the heat, with current good models generating almost four times as much heat energy as it takes to run the heat pump.  As always there is a catch: a heat pumps efficiency goes down dramatically when the temperature difference is large, and fail completely when the outside temperature is freezing.  Further reducing their appeal is that they all run on electricity (see above for a discussion about electric - although it is possible to use other fuels, the central component of a heat pump is an electric motor, so electric is the natural choice).  The other central part of a heat pump is a gas which moves the heat, typically some kind of Freon, which is a kind of CFC, which are both ozone depleting and a greenhouse gas.  Although most CFC compounds have been replace with HCFCs that have little ozone depletion properties, they are still greenhouse gases.  New alternative are appearing, but as always one should be skeptical of manufactures claims.  As long as the refrigerant doesn't leak out and is recycled at the end of the heat pumps lifetime, there is no significant damage to the environment, but certainly the risk is still there.

Heat Distribution Methods

Forced air - the furnace heats the air, and then an electric fan pumps the air through ducts to all parts of the house.  Forced air systems are relatively inexpensive and are by far the most common installed.  While most forced air systems are part of furnaces that use a simple heat exchanger to transfer heat from a furnace to the home's air, a boiler can also be used in a configuration called a fan-coil because a coil of hot water from the boiler is put in front of a fan which blows air over the coil to heat it.  The fan-coil system runs at a much lower temperature than a normal furnace and so doesn't cook the dust.  Forced air systems can also be used for cooling and ventilation, which is a significant benefit, but also means they can effect a negative effect on a home's air quality also (see ventilation).  Forced air systems can cause a significant temperature stratification (difference between the temperature at the floor & ceiling), wasting heat, especially with high ceilings.  The main drawback of the fan-coil system is that because air holds very little heat, the fan must move a lot of air to heat the house and the hot water tank must be set to much higher than normal (140-160F instead of 120) causing greater standby loss.

Convection - a heat source (like electric or hot water baseboards) is put in every room (typically under a window) and the heat rising off it sets up convection currents in the room that distribute it around the room.  These systems typically don't distribute heat very well, although in a super-insulated house you may be able to lower the radiator temperature enough to get around the problem since stratification is cause by putting very warm air into cooler air.

Radiant - in a radiant heating system, one of the surfaces of a room is heated (typically the floor) and it gives off radiant heat to any colder object.  Radiant heat is popular among green builders because it avoids the cooked dust and temperature stratification problems of forced air, and potentially allows for reduced heat loss due to providing equivalent comfort using a lower air temperature (see heat loss calculations).  This argument is also the basis of claims that radiant heat will save energy (and money).  In fact the energy use of a house is dependent mostly on outside air temperature and the amount of insulation keeping the heat in.  In fact at least one study showed that people did not lower their thermostats and so didn't save anything.  In a well insulated house the argument is a moot point because there will be much less difference between the floor and air temperature in this case--this is because less heat is needed in the floor and less escapes from the air.

Homes which are using passive solar direct gain systems where the floor is the thermal mass don't work well with floor radiant heat because an already warm floor when heated by the day's sunlight will then get uncomfortably hot.  One solution is to avoid putting tubes in that part of the floor that absorbs solar.  If heat is still needed in that area, a radiator could be used.

The conventional wisdom is that radiant heat doesn't work unless the pipes are installed in some thermal mass (concrete etc), but this isn't the case.  It is true that without thermal mass the floor will not hold heat for very long after the hot water stops running, but all this really affects is how long it takes the floor to heat up and cool down.  In a super-insulated house the heat loss is low enough that the floor shouldn't be all that much warmer than the air (because you need to put less heat into the floor and the air loses less), so it isn't really even fair to call such systems "radiant" since they are delivering substantial heat to the air and objects in the room. 

Efficiency in a forced air system- design short ducts, duct sealing
The biggest inefficiency in forced air systems isn't in the furnace, but in the ducting system.  Houses can loose up to 40% of the heat delivered by the furnace to uninsulated and poorly sealed ducts run in unheated attics and crawlspaces.  Ducts should always be installed inside the heated envelope, and when this isn't possible, they should be sealed tightly and well insulated.  The safest way to design a efficient forced air system is to centrally locate the furnace and keep the ducts short and inside the heated space.  In order to get even heat distribution, each room must receive enough warm air to make up for its heat loss.  A well designed ducting system will distribute the supply and return ducts throughout the house so that there is a natural distribution of air to all corners of the house.  For more information on duct layout see the ventilation section. 

Nighttime setback - fallacies
There was a big campaign in the 1970's to get people to turn their thermostat back at night to save energy, and as a result this has become part of many people "common knowledge".  This technique works when the house is poorly insulated and leaky, such that before the night is over it gets to the cooler thermostat setting  quickly.  As the house is cooling down, no energy is saved because it all has to be added back in the morning to reheat the house.  The energy that is saved, is during the time the house is at its steady "cool" temperature, because heat loss has been reduced during this time and the energy required to re-heat it in the morning is the same.  When a house is superinsulated and well sealed, it often only cools off by a few degrees, unless it is quite cold out, and even then the temperature drop during the night is not likely to go beyond the ten degree setback that was generally recommended.

Resources

Heating Systems for Your Home, Richard Kadulski,
The Drawing-Room Graphic Services Limited, 1998

Builders Guild Series, Joe Lstiburek, EEBA, 2000