As Hungary assumed the presidency of the European Union, energy ministers convened to explore potential support for geothermal energy. This promising green energy source, while facing significant growth challenges and investor uncertainty, has emerged as a potential solution to Europe's energy sovereignty and climate change goals.
Geothermal energy, which harnesses heat from the Earth's crust for heating or electricity generation, topped the agenda. Despite providing only 0.2% of the EU's electricity, Hungary, a pioneer in the field, boasts the largest geothermal heating system in the Union. However, global investment in climate technology, including geothermal, has declined by 20% year-on-year in the first half of 2024, according to Sightline Climate.
Deep geothermal energy, which involves drilling to access hotter water sources for electricity generation, carries significant risks deterring investors. These include high upfront costs, geological uncertainties, and potential environmental impacts such as seismic activity, groundwater contamination, and the release of polluting gases. While successful projects can yield substantial returns, failed attempts can result in losses of up to a million euros.
To address these challenges and stimulate investment, EU member states are considering pooling scientific resources, standardising environmental assessments, and implementing financial incentives like subsidies, state guarantees, or "prospecting insurance." These measures aim to encourage exploration and development while mitigating risks.
Despite these hurdles, geothermal energy offers the potential for a stable, locally sourced energy supply. Countries like Belgium, the Netherlands, and Germany possess vast, untapped geothermal resources that could significantly contribute to future energy security.
