Key Questions from the 2026 Annual Progress Report for Vermont
1. How does energy affect affordability?
Affordability is one of Vermonters’ top concerns. Prices have risen sharply in recent years, causing strain on household and business budgets. While prices of goods and services in Vermont are similar to neighboring states, wages here are lower than regional averages — leaving many Vermonters with an especially challenging wage versus price gap.
On average, housing is the single largest expense for households in the Northeast — with the cost of space and water heating making up a significant part of housing costs. Transportation is the second largest average household expense. This is especially true for households that rely on gasoline vehicles.
Reducing the amount of money spent on energy is crucial to affordability. Vermonters have the 4th highest average household energy costs of any state in the country, at over $7,300 per year going to transportation fuels, heating fuels, and electricity. These high household energy costs are driven by our over-reliance on expensive fossil fuels. Vermont has the lowest electricity rates in New England, but a higher percentage of our homes rely on expensive delivered heating fuels like fuel oil and propane. Vermonters also drive more miles per capita than residents of any other New England state, mostly in gasoline vehicles.
Resulting energy cost burdens — the share of income spent on energy — are not felt equally. For those with the lowest incomes, energy expenses often take up more than a quarter of household budgets. And that is just for fuel — these numbers do not account for equipment and maintenance costs. Even though lower-income households spend less money on energy than upper- income households, their energy burdens are far higher because their household incomes are much lower.
Achieving durable affordability requires access to lower cost and more price-stable energy sources, which often necessitates a transition to new equipment. Currently, the most widely used energy sources by Vermont households — gasoline and diesel for transportation, and fuel oil and propane for heating — are some of the most expensive and price-volatile fuels. In contrast, electricity, fossil gas, and wood are all energy sources that have historically been both lower cost and more price-stable.
The effects of fossil fuel price spikes were especially evident from 2021 to 2022, when annual energy costs for many Vermont households increased by over $2,250 in a single year. Fuel use actually stayed level across those two years, with the cost increase for households driven by spiking gasoline and heating fuel costs following Russia’s 2022 invasion of Ukraine.
Another fossil fuel price spike occurred after the start of the war in Iran in early 2026. Prices rose dramatically, with gasoline increasing by an average of over 3¢ per day and diesel by more than 5¢ per day in March.
Comparing prices at the end of February versus the end of April, an average Vermont household driving gasoline cars and heating their home with fuel oil would have paid $327 more for the same amount of fuel. These price spikes hit Vermonters at the end of a particularly cold heating season when many needed to buy more fuel than they had budgeted for, and many who had pre-buy contracts had already used up the lower-priced fuel in their contracts.
At the prices Vermonters were paying for fossil fuels before the war in Iran started, statewide costs would have been $475.3 million dollars for gasoline, diesel, and fuel oil in the four months from March through June. However, prices rose rapidly in March and April, and stayed high through the end of June and beyond. This increased the cost for Vermont purchasers of gasoline, diesel, and fuel oil by an additional $160.4 million for the four months of March through June than would have been the case had prices for those fuels remained at pre-war levels. This was $160.4 million that could have been spent on other things, such as food, housing, and health care for Vermont residents. For Vermont businesses, these higher prices drove up their cost of doing business, eating into profit margins and/or forcing them to charge customers higher prices to make up for higher fuel expenses.
2a. Efficiency: How can we use less energy while getting the same output?
When thinking about efficiency in relation to energy, we tend to focus on end-use efficiency, or how much energy it takes to produce the same result, such as from a light bulb or an appliance. Vermont has made significant progress in this dimension of energy efficiency thanks to long-term investment in end-use energy efficiency programs. But the question of efficiency is relevant throughout the entire energy system, from material sourcing to energy production to energy end-uses. Understanding the full impact of beginning-to- end efficiency reveals the hidden advantage of renewables and electrification.
Renewables and electrification save energy at every step of our energy system. Renewable electricity generation can be considered 100% efficient in the sense that there is no extra cost to or waste from sunlight, wind, or water that is not converted to energy by a panel or a turbine. In contrast, fossil fuel electricity generators pay for 100% of the fuel they use, but only 30%–40% of it is converted to useful energy in the form of electricity and the other 60%–70% is lost as waste heat.
When it comes to the end use of energy for heating and transportation, heat pumps and EVs have major efficiency advantages over fossil fuel-based boilers, furnaces, and internal combustion engine vehicles. Specifically, heat pumps are up to 3–4 times more efficient than fossil-based heating and EVs are 2-4 times more efficient than gasoline and diesel vehicles.
2b. Efficiency: How do different energy choices compare on mining and materials?
It is less common to look at efficiency in relation to materials and mining, but here too there are large differences between a fossil fuel and an electricity-based energy system. A fully electrified system would require mining of many materials, especially steel, aluminum, copper, nickel, graphite, silicon, lithium, and cobalt. While there are fair questions about these materials needed for batteries and renewable energy generation, it is important to ask the question: compared to what? The total material needs in tons extracted — including materials needed to build all new generation, storage, and transmission infrastructure for a fully electrified economy — would be over 60 times lower annually than the amount of fossil fuels extracted each year to support the current fossil fuel economy.
The beginning-to-end efficiency advantage of renewables and electrification provides a massive opportunity to lower energy use, energy costs, and energy pollution all at once. These modern technologies allow us to have the things we actually want from energy — comfort, convenience, and prosperity — while reducing the harms of expensive, wasteful, material-intensive, and heavily polluting fossil fuels.
3. What degree of dependence vs. freedom do different energy choices provide?
Vermont’s energy sources vary widely in terms of where they come from and how exposed they are to global supply and price shocks. Fossil fuels such as gasoline, diesel, and fuel oil are part of a global commodity market. Vermont households, businesses, and industry relying on these fossil fuels are particularly susceptible to events and price spikes beyond the reach of national and state policy and regulation, with extremely limited local or regional alternatives available. As of 2024, 49% of Vermont’s energy supply was globally exposed.
Fossil gas and propane are subject to some of the same uncertainties, but, being part of a more North America–specific market, they have tended to be more price stable than other fossil fuels. Wood and electricity are the two main energy sources that are widely produced in Vermont, providing Vermonters with a greater degree of energy independence, resilience, and price stability. Even when electricity or wood do not come from Vermont, they tend to come from our neighbors, especially other New England states, Québec, and New York.
Across all statewide energy use, 10.8% of Vermont’s energy supply is produced in-state, with another 17.6% coming from a combination of state and regional sources.
Another key factor for different energy sources is the degree of price transparency and choice Vermonters have. Electricity, fossil gas, diesel, and gasoline all have a high degree of price transparency, which makes it easier for customers to make informed purchasing choices. Electricity and fossil gas are regulated fuels, with rates that must be approved by the Public Utility Commission, and which are stable for longer periods of time. Though gasoline and diesel prices are more volatile, they are easy to understand because they are highly visible on roadside signs and fuel pumps, and are reported regularly in the press. In contrast, fuel oil and propane dealers are largely unregulated and their pricing is highly variable — some customers can lock in pre-buy or bulk purchase rates on these fuels, but others cannot due to their lack of cash-on-hand, credit history, geographical location, or other circumstances. Another challenge to informed consumer choice is the little-known fact that propane has only two-thirds the heat content per gallon compared to fuel oil. This means the price per gallon can create confusion, because a customer dependent on propane needs more gallons of fuel to produce the same amount of heat.
Generating energy, be it fossil fuel or renewable, requires upfront investment in extraction and refining infrastructure and power plants, or in renewable generation technologies. However, the ongoing material needs of different types of energy vary widely after the initial upfront cost.
Fossil fuel users must rely on the continuous extraction and use of fossil fuels — which are subject to the volatility of global commodity markets — in order to heat their homes and use their vehicles. Fossil fuel power plants are also subject to similar pressures when they use North American commodity fuels like natural gas to generate electricity. Fossil fuel consumers are locked into this need for constant fuel input over the lifetimes of their gasoline vehicles and other end-use technologies, leading to continued exposure to volatile fuel prices for multiple years. In times of global supply disruptions, access to these fuels can become more expensive or limited, and for owners of fossil fuel technologies, there are limited alternatives: they are usually stuck depending on one type of fuel.
In contrast, once renewable generation technologies are built, the fuel source (e.g., sunlight, wind, water) needed to keep electricity flowing is cost- and pollution-free. The fuel to power this generation is also highly abundant and accessible in most locations. This insulates renewable electricity users from geopolitical tensions and market fluctuations. The main cost for renewable generation is tied to the initial installation. Ongoing operational costs are minimal, especially in comparison to the fossil fuel system. Once installed, electric technology provides years of energy independence thanks to free and broadly accessible renewable energy inputs (e.g., sunlight, wind, water). In contrast, combustion equipment requires constant fossil fuel input, creating years of ongoing mining and refining, along with all of their associated economic and environmental costs.
4. How do different energy choices affect the Vermont economy?
100% of fossil fuels used in Vermont are imported into the state, and the majority of the money we pay for these fuels leaves the Vermont economy to pay their wholesale commodity cost. Only 26% of the money we spend on fossil fuels recirculates in the Vermont economy, going to Vermont gas stations, fuel dealers, and in-state transportation, storage, and delivery.
In contrast, 58% of the money we pay for electricity stays and recirculates in the Vermont economy, supporting the jobs and spending of Vermonters, including line workers, tree trimmers, local power producers, and other utility employees.
In addition to direct costs, energy sources are assessed widely varying levels of taxes, fees, and charges. Gasoline and diesel contribute the highest taxes, fees, and charges, mostly to pay for road building and maintenance. On the other hand, propane and fuel oil used for heating are assessed very low taxes, fees, and charges, even though they are some of the most polluting fuels. Fuel oil and diesel are particularly interesting; they are essentially the same fuel, have the highest GHG emissions of any commonly used fuel in Vermont, and yet when used for transportation they pay 5.4% for fees, taxes, and charges, while fuel oil contributes only 0.5%.
Despite electricity contributing a greater share of dollars spent back to the Vermont economy — and despite electricity being our least polluting energy source — Vermont policy asks fossil heating fuels to contribute far less to societal needs through taxes, fees, and charges than electricity and transportation fuels.
5. What are the most significant impacts on human health and the environment of our current reliance on fossil fuels?
The use of fossil fuels harms human health and the environment across its full life cycle — from production, to refining, transportation, and combustion. At all stages of the supply chain, fossil fuels result in toxic emissions and spills, which pollute the air, water, and land. Fossil fuel combustion also results in airborne particulate pollution that worsens respiratory health, exacerbating asthma and impacting lung health.
Fossil fuels are the primary cause of climate destabilization, with their burning responsible for 81%–91% of human-caused CO2 emissions in the last decade. The results of climate destabilization include more frequent and intense precipitation, leading to more destructive flooding events, as we have experienced in Vermont.
Global warming–driven changes to precipitation patterns, storms, temperature extremes, flooding, and drought present major challenges for Vermont. This is especially true for many whose work is vital to our economy and communities, including farmers and those who work in outdoor recreation. The elderly, the very young, those who are unhoused, and others who have medical concerns are also particularly vulnerable to these climate impacts.
Global warming is also leading to greater incidences of tick- and mosquito-borne disease, wildfires and wildfire smoke, and rising sea levels, each of which create significant harm to human wellbeing. Here in Vermont, we have experienced increases in heat-related illness, stroke, and death due to rising temperatures. Burlington experienced a 155% increase in extreme heat days since 1960.