Geothermal Heat Could Replace Fossil Fuels at 30 European Industrial Clusters, Saving €850 Million a Year and 4.3 Million Tonnes of CO₂

Most discussions of the energy transition focus on electricity: replacing coal and gas power plants with wind, solar and batteries. But a large share of industry's energy use and emissions comes from heat, which factories use to dry, cook, distil, melt and process materials. A new analysis suggests that a clean source of heat lies directly beneath many of Europe's industrial centres.

The analysis identifies 30 industrial clusters in 11 European Union countries where geothermal energy could replace fossil fuels for industrial heat, according to SustainabilityOnline on Thursday, October 29. Converting these sites could displace more than €850 million in annual fuel spending and avoid 4.3 million tonnes of carbon dioxide emissions each year.

Opportunities are flagged in Germany, France, Italy, Poland, Austria and the Netherlands, among others, and the analysis identifies a further 152 candidate clusters for potential development.

The industrial heat challenge

Heat accounts for a large share of industrial energy demand in Europe, and most of it is still produced by burning natural gas, oil or coal. Industries such as food and beverages, paper and pulp, chemicals, textiles and pharmaceuticals rely on steam and hot water for their processes, while heavy industries such as steel, cement and glass require extremely high temperatures.

Decarbonising industrial heat has proved more difficult than decarbonising electricity. Electric alternatives, such as industrial heat pumps and electric boilers, are available for some applications but can be expensive to run when electricity prices are high. Hydrogen is being explored for high-temperature processes but remains costly and in limited supply.

How geothermal heat works

Geothermal energy uses heat from beneath the earth's surface. In some regions, hot water and rock lie relatively close to the surface, making it possible to drill wells and bring heat up for direct use or electricity generation. Unlike wind and solar power, geothermal energy is available around the clock regardless of weather, making it well suited to industrial processes that run continuously.

For industrial heat, geothermal systems can supply hot water or steam at low to medium temperatures directly, or be combined with heat pumps to raise temperatures further. Geothermal heat is particularly suitable for processes requiring temperatures below about 200 degrees Celsius, which covers a significant portion of industrial heat demand in sectors such as food processing, paper and chemicals.

Why clusters matter

The focus on industrial clusters, where multiple factories are located close together, is important. Drilling geothermal wells and building heat networks requires significant upfront investment. Serving several industrial users from shared infrastructure can spread these costs and make projects more economical. Clusters also often have existing infrastructure, such as heat networks, that can be adapted for geothermal heat.

Energy security benefits

Europe's energy crisis following Russia's invasion of Ukraine in 2022 exposed the continent's dependence on imported natural gas. Prices soared, forcing some energy-intensive factories to cut production or close. Although prices have eased from their peak, Europe remains vulnerable to supply shocks, as illustrated by the current surge in oil and gas prices driven by conflict in the Middle East.

Geothermal heat offers a domestic, stable source of energy that is not exposed to international fuel markets. Replacing imported gas with local geothermal heat would improve energy security as well as reduce emissions. The estimated savings of more than €850 million a year in fuel spending reflect the value of this independence.

The countries with potential

Germany, Europe's largest industrial economy, has significant geothermal resources, particularly in the Upper Rhine Valley, the North German Basin and the Bavarian Molasse Basin around Munich. Munich's municipal utility has made geothermal heat a central part of its plan to decarbonise district heating.

France has a long history of geothermal district heating, especially in the Paris Basin, where geothermal wells have supplied heat to homes for decades. Italy is a pioneer in geothermal electricity, having built the world's first geothermal power plant at Larderello in Tuscany in the early twentieth century. The Netherlands has developed geothermal heat for its greenhouse horticulture industry, while Poland and Austria have also identified geothermal resources.

Barriers to deployment

Despite its potential, geothermal energy has grown slowly in Europe. High upfront costs for drilling, uncertainty about underground resources and long permitting processes have deterred investment. Exploratory drilling carries the risk of finding insufficient heat or water flow, and investors are often reluctant to bear this risk.

Policymakers have proposed measures to address these barriers, including risk insurance schemes for exploration, faster permitting and better geological data. The European Union has recognised geothermal energy as an important part of its strategy to reduce dependence on fossil fuels, and several member states have launched geothermal strategies.

Learning from the oil and gas industry

Advances in drilling technology, many developed by the oil and gas industry, are making geothermal energy more accessible. Techniques such as horizontal drilling and enhanced geothermal systems, which create or improve underground reservoirs, are expanding the range of locations where geothermal energy can be used. In the United States, companies such as Fervo Energy have demonstrated enhanced geothermal systems that use oil and gas drilling techniques.

The oil and gas industry's expertise, workforce and equipment could play an important role in scaling geothermal energy, offering a pathway for workers and companies to transition to clean energy.

What it means for India

India's industrial sector also relies heavily on fossil fuels for heat, and decarbonising industrial heat will be essential for meeting its net-zero target of 2070. India has geothermal resources in regions such as Ladakh, Himachal Pradesh, Gujarat and Chhattisgarh, though they remain largely untapped. The government has explored geothermal pilot projects, including in Ladakh.

More broadly, the European analysis highlights the importance of addressing industrial heat in climate strategies. Indian industries, from textiles and food processing to chemicals and pharmaceuticals, could benefit from solutions such as solar thermal energy, heat pumps, biomass and, where available, geothermal heat. As European buyers increasingly scrutinise the carbon footprint of imports, including through the EU's carbon border adjustment mechanism, Indian exporters face growing pressure to reduce emissions from their production processes.

What comes next

The analysis is likely to inform discussions among policymakers, industry and investors about how to accelerate geothermal deployment in Europe. Developing the 30 identified clusters would require coordinated investment, supportive regulation and partnerships between industrial companies, utilities and geothermal developers. With energy prices volatile and climate targets approaching, the case for tapping the heat beneath Europe's factories is becoming harder to ignore.