Of course, switching to natural gas or propane requires a new boiler or furnace. An efficient wall-mounted natural gas or propane boiler will cost about $10,000. While switching to natural gas might pay off, remember that, like oil, natural gas is a limited resource, and when supply is tight, prices can spike. Wood-Pellet Boiler Wood-pellet boilers are a relatively new method of home heating. Wood pellets are made from whole round wood or wood-manufacturing byproducts, for instance sawdust. Heating a home that typically uses 1,000 gallons of oil would take approximately eight tons of pellets, costing a little more than $2,000. The carbon footprint of a wood pellet boiler isn't yet known, but it is much lower than that of any fossil fuel-based system. Wood-pellet boilers are pricey, running about $14,500 for a full system. However, one dealer of wood-pellet boilers says the system will pay for itself in a little more than six years. While wood is a renewable resource, it is not infinite. As a result, the price of wood pellets may vary with demand. There's one more catch: Wood-pellet boilers are growing in popularity, and many regions face shortages of both pellets and pellet boilers. Electric Boiler An electric boiler will cost about $2,000, plus installation expenses. Electric boilers have been around for a while. They're considered to be between 95% and 100% efficient, but because of the high price of electricity, they're not particularly popular. It would cost more than $7,000 to heat your home using an electric furnace or boiler (assuming a cost of $0.167/kwh). But here's the real kicker: Because most of the electricity in this country comes from coal, an electric system would spew more than 54,000 pounds of carbon dioxide into the atmosphere.