Key Findings from the 2025 Annual Progress Report for Vermont
1. Over $2 billion a year is spent on fossil fuels in Vermont
Dependence on fossil fuels to meet the majority of our energy needs in Vermont comes with a large price tag. Over $2 billion was spent on fossil fuels in Vermont each year from 2022–2024, equivalent to approximately 5% of Vermont’s annual gross state product (GSP).
Fossil fuels are not only expensive, they are also price-volatile. Over the last several years, the total amount of fossil fuel consumption in Vermont for transportation and heating has remained fairly consistent, at between 80 to 85 trillion Btus per year. However, fossil fuel prices have varied widely, resulting in large cost swings. For instance, Vermont experienced a 38% increase in statewide fossil fuel costs in just one year, from $1.83 billion in 2021 to $2.53 billion in 2022.
This price volatility is particularly felt by households with a higher reliance on unregulated fossil fuels for their heating and transportation needs. For example, a household dependent on fuel oil for heating and on gasoline for two vehicles paid $2,500 more for fossil fuels in 2022 than 2021, a 50% year-on-year increase.
2. Investing in more efficient technologies can provide durable affordability
Modern electric technologies are far more efficient than fossil fuel equipment and older electric equipment, using less energy to perform the same tasks. This often leads to financial savings, while also reducing pollution.
Electric vehicles (EVs) are a good example of this, being far more efficient at converting energy into propulsion than fossil fuel vehicles. Most of the energy used by internal combustion engines is wasted via heat and other engine losses, with only 16%–25% of the total energy from gasoline being delivered to the wheels. In contrast, 87-91% of the energy used in electric vehicles is delivered to the wheels. Because of this, each dollar spent on energy goes much farther in an EV, enabling significant cost savings for drivers. A dollar spent on fuel for an average gasoline car will only propel the vehicle 7 miles, while a dollar spent on electricity for an EV moves the car 2–3 times farther. Combined with maintenance savings, the lower fuel costs of EVs typically result in $6,000–$10,000 lower lifetime costs as compared to gas vehicles, even without any EV purchase incentives.1
Similarly, modern heat pump water heaters have significant efficiency benefits over fossil fuel water heating equipment and traditional electric resistance water heaters. Heat pumps used for space or water heating can achieve efficiency rates much greater than 100% because the energy input is used to transfer rather than generate heat. A heat pump water heater requires about one-third of the energy of an electric resistance water heater — and less than one-fifth of the energy used by a propane water heater. This allows heat pump water heaters to provide the same amount of hot water with less energy use and at much lower costs over the life of the equipment.
Paired with the greater price stability of electricity as compared to fossil fuels, the efficiency benefits of modern electric technology present significant cost-saving opportunities for households that electrify their transportation and/or space and water heating. Although each home will be different, beneficial electrification has the potential to reduce household energy expenditures by a third, or even more. For example, a single-family household that drives one gasoline vehicle and uses propane for heat and hot water could save more than $1,600 per year in fuel costs by switching to efficient electric alternatives.
However, households must be prepared for changes in billing and payment after electrification. In the example below, after replacing their gasoline car with an electric car, and their space and water heating from propane to heat pumps, all of the household’s energy expenses would appear on their monthly electric bill. While electric bills would increase, overall costs across all energy bills would be lower.
3. Vermonters are adopting clean energy solutions — support is needed to help those who would benefit most
In the past decade, thousands of Vermonters have weatherized their homes, installed cold climate heat pumps and heat pump water heaters, and switched to electric vehicles. Although the up-front costs for these solutions can be higher than other equipment, they often deliver long-lasting savings, bringing down monthly and lifetime energy costs.
Although Vermonters with lower incomes spend less on energy in dollar terms, they spend a much higher share of their overall income on energy, resulting in higher energy burdens. Vermonters earning less than 60% of the median income spend an average of 20% of their income on heating and electricity — while those earning more than 120% of the median income spend an average of only 3% of their income. The durable affordability made possible by weatherization and modern electric equipment can make the biggest difference to Vermonters who have lower incomes — if they have the up-front support to afford the improvements.
The Weatherization Assistance Program (WAP) is an example of a program working to create access to energy affordability solutions for lower income households. WAP provides free weatherization services to increase health and comfort in a home, while reducing fuel use by 31%, on average.1 However, current funding for weatherization, including the WAP program, is insufficient to meet Vermont’s weatherization goals.
4. Investing in energy efficiency and electrification keeps money in Vermont and supports local jobs
Beneficial electrification can support the state economy by re-localizing our energy dollars and investing in Vermont jobs. Fossil fuel spending results in a significant drain of money out of the Vermont economy, with 76% of the dollars we spend on fossil fuels leaving the state. In contrast, purchasing electricity keeps far more of our energy dollars recirculating in state, supporting local workers and businesses. This is because most of the cost of fossil fuels pays to import a global commodity product, whereas much of the cost of delivering electricity goes to pay for local labor and infrastructure.
There are about 1,400 jobs at Vermont utilities supporting clean energy, but this is only a fraction of the over 18,000 clean energy jobs in the state. In fact, Vermont leads the nation in the share of clean energy employment, with clean energy jobs making up 6% of all Vermont jobs. The largest and fastest growing segment of these jobs is installation, maintenance, and repair of green technologies (including weatherization), followed by professional services like trade and distribution, engineering and research, and manufacturing.
5. The costs of failing to reduce climate pollution are real and increasing
Climate disruption is already causing significant harm and costs, both around the world and here in Vermont. Between 2011 and 2024, Vermont experienced 25 federally declared climate-related disasters and had the 4th highest per capita disaster costs of any state, as measured in federal assistance dollars. Nationwide, four Vermont counties ranked among the highest for the number of climate-related federal disaster declarations, with Washington County having the most in the country. Most of these disaster declarations were due to damage caused by floods, many of which were severe enough that they would previously have been considered once-in-a-century occurrences.
Delaying climate action ends up being most costly to the most vulnerable. Those with lower incomes are more likely to live in a floodplain and to suffer damage to their homes in a climate-related disaster. Meanwhile, as summer temperatures increase, lack of access to cooling is most dangerous for elders in unweatherized homes and to the unhoused.
There are opportunities for Vermonters to save money while also reducing climate pollution and the damages it causes to society. For example, choosing an electric vehicle rather than a gas vehicle results in average fuel and maintenance cost savings of $9,900 over the life of the vehicle. Gasoline use over the life of a vehicle also creates climate pollution estimated to cause $7,400 in costs and damages to society, as measured by the Social Cost of Greenhouse Gases (SC-GHG). The SC-GHG is “the monetary value of the net harm to society from emitting a metric ton of that GHG into the atmosphere in a given year.” The U.S. Environmental Protection Agency (EPA) estimated the social cost of emitting one metric ton of CO2 in 2020 at $190, though the cost per ton rises with each passing year.
People often ask how much it will cost to combat climate change. A question that is at least as important to ask is: what is the cost of inaction? When we don’t act, that is also a choice with real and ever-increasing costs and consequences, especially for today’s young people and future generations.
6. State leadership and collaboration matters
2025 marks two decades since Vermont first established statewide emissions reduction goals. In 2020, the Global Warming Solutions Act (GWSA) became law, replacing goals with legal requirements. Despite key milestones in the last several years — including becoming the first state to pass a Climate Superfund law and the second state to establish a requirement for 100% renewable electricity by 2035 — Vermont does not currently have comprehensive policy pathways in place to achieve our climate commitments or energy affordability ambitions. Therefore, additional policy is needed, especially in our highest-polluting and highest-cost sectors: transportation and thermal.
Many of the places that are making the most progress in equitably and cost-effectively reducing climate pollution have taken a comprehensive, economy-wide approach — often involving a cap on emissions. “Cap-and-invest” is a policy that establishes a declining cap on emissions and creates a long-term revenue source that can be used for rebating money directly to residents, as well as for funding income-sensitive programs and incentives. Vermont has participated in a successful multi-state cap-and-invest program for nearly two decades (the Regional Greenhouse Gas Initiative); however, RGGI only covers the electricity sector, which is responsible for just 3% of Vermont’s GHG emissions.
Given clean energy policy, regulatory, and funding rollbacks at the federal level, state leadership is necessary to continue moving solutions forward to reduce energy costs and cut climate pollution.
