The type of fuel you use for your hot water will make a huge difference to both your greenhouse gas emissions and your operating costs. Using a renewable energy like solar will mean that you'll be using free, clean energy most of the time - whereas an electric hot water system will inevitably cost more to run and have a greater environmental impact.
Not all fuel sources are viable in all areas, though - and in many cases you'll need to choose between the fuel sources that are available.
Modern natural gas hot water systems are a cost effective and efficient choice. Options exist for this fuel type to serve households of most sizes and levels of demand.
Electric systems are inefficient and relatively expensive to run. For this reason they are generally only favoured these days where no alternative is possible.
Solar boosted systems are solar-based systems that use a gas or electricity booster to maintain a sufficient temperature, regardless of how much sun there is.
Heat pump hot water systems extract heat from the air using a heat exchanger. These systems are popular where solar and gas aren't a realistic option.
Home fuel cells create a lot of heat and in most cases incorporate a hot water system. HFCs are still prohibitively expensive though, and as a result are uncommon.
Geothermal systems pump refrigerant through underground pipes to draw heat from the ground. While relatively cheap to run, they are expensive to install and therefore fairly uncommon.
LPG (or liquid petroleum gas) is very similar to natural gas, but is more expensive to use due to the higher price of the fuel.