An oil furnace can be just as energy-efficient as a heat pump, but comes with its own disadvantages. While heating oil is a non-renewable resource, there are some companies that use a biodiesel blend that doesn't create as much pollution as standard heating oil.
An oil furnace's efficiency is measured by comparing the amount of energy a unit uses and its total heat output, which is known as its annual fuel utilization efficiency. A percentage of the energy heats up the home while another portion of the energy is lost through the chimney. The higher the AFUE percentage, the better. Furnace users should bear in mind that a portion of the furnace's energy can be lost in the ducts.