The Geothermal Industry Calls for "Identity Recognition"

Entering the 14th Five-Year Plan, what role will geothermal energy play in the new energy system? Several industry insiders say geothermal will serve as a complementary role alongside wind power and photovoltaics, each showcasing their strengths.

Geothermal energy has core advantages such as environmental friendliness, low carbon emissions, renewability, stability, and large reserves. After years of technological accumulation, China’s geothermal resource development has developed rapidly. By the end of 2025, the application area for geothermal heating and cooling will reach 1.65 billion square meters.

The 14th Five-Year period is a critical stage for China’s geothermal industry development. The national level has issued a series of policy documents, such as the “Several Opinions on Promoting the Development and Utilization of Geothermal Energy,” to strengthen top-level design. How will the geothermal industry develop during the 15th Five-Year Plan? Nie Xiaowei, director and party secretary of Sinopec Jianghan Petroleum Management Bureau Co., Ltd., suggests promoting the formulation of the “Geothermal Energy Development and Utilization Management Regulations” and establishing major national science and technology projects to break through deep geothermal development technologies, accelerating the industry’s value realization.

Underground heat, above ground barriers

Academician Li Gensheng of the Chinese Academy of Engineering states that China’s total geothermal reserves amount to 857.25 trillion tons of standard coal, making it a major country in direct geothermal utilization, ranking first in the world in scale.

However, constrained by unclear strategic positioning, prominent core technology bottlenecks, and imperfect policies and regulations, the annual utilization of geothermal resources is only 40.19 million tons of standard coal, and the resource potential has not been fully released.

Cross-sector management conflicts have become a barrier to geothermal development.

Geothermal energy carries multiple labels: it’s like water, like minerals, and like heat. The natural resources department manages mineral rights, the water conservancy department handles water use permits, the housing and urban-rural development department oversees heating planning, and the energy department manages clean energy utilization. A single geothermal project often needs to go through all approval procedures, which can take years.

The “multi-agency management” pattern causes policy formulation to lack coordination, with overlapping and repetitive administrative approval processes. This not only increases compliance costs for enterprises but also restricts unified resource planning and efficient development.

What further pressures enterprises is the policy on taxes and fees. Li Gensheng points out that geothermal is currently the only renewable energy that requires resource tax payments, with rates and transfer income ratios significantly higher than those for oil, natural gas, and coal. This means that, as a clean energy source, geothermal projects carry a heavier cost burden from the start. Meanwhile, wind and solar power benefit from subsidies, green electricity trading, and tax reductions, often leaving geothermal outside these policy benefits.

This policy gap directly affects market choices. For example, a geothermal heating project requires initial drilling investments of tens of millions of yuan, with long payback periods; in contrast, similarly scaled air-source heat pumps or photovoltaic projects, with clear subsidy channels and financing support, are easier to justify financially. Industry insiders say that geothermal isn’t technically infeasible, but policies have not kept pace.

Old oil fields creating new geothermal sources

Some companies have never stopped exploring geothermal industry opportunities.

In Shandong Donying, at Sinopec Shengli Oilfield Gudong Oil Production Plant’s Dongyi Joint Station, two abandoned gas wells have been converted. They were once waste gas wells, now transformed into geothermal source wells. The project uses a “high-temperature residual heat from gas wells + medium-temperature residual heat from oil wells” dual-heat-source cascade heat exchange technology, extracting residual heat from 3,200 meters underground to replace traditional gas heating within the station.

This marks a breakthrough in industrial-scale application of deep geothermal resources in the oil and gas sector. According to estimates, the project’s annual clean heating capacity reaches 209,000 gigajoules, reducing heating costs by 59%, replacing 6.38 million cubic meters of natural gas, and cutting CO2 emissions by 13,500 tons annually. “The collaborative development of geothermal in oil fields provides a replicable and promotable successful model for the clean transformation of traditional oil and gas industries, which is significant for realizing the new energy transition of oil and gas industries and promoting national energy restructuring,” said Sun Huanquan, academician of the Chinese Academy of Engineering and director of the National Key Laboratory for Deep Geothermal Enrichment Mechanisms and Efficient Development.

Not stopping there, in isolated oil regions, the first medium-deep geothermal project for oil and gas production using two abandoned wells in Shandong has been put into operation; in the Junggar Basin of Xinjiang, the Chunfeng joint station’s residual heat utilization project has an annual heating capacity of 270,000 gigajoules. To date, Shengli Oilfield has completed 51 geothermal residual heat utilization projects, repurposed 25 abandoned wells, with an annual clean heating capacity of 3.46 million gigajoules.

Li Gensheng recommends establishing geothermal development support mechanisms in key regions and implementing scaled geothermal heating substitution by zone and category. He believes that coupling geothermal with wind and solar power can enhance renewable energy absorption capacity, allowing geothermal power generation to serve as a foundational and backup power source in the new power system.

Reviving more geothermal resources

Entering the 15th Five-Year Plan, what role will geothermal energy play in the new energy system? Several industry insiders say geothermal will serve as a complementary role alongside wind and solar, each showcasing their strengths.

At the policy level, the 15th Five-Year Plan is expected to be the period when the geothermal industry truly gains “recognition.” Nie Xiaowei suggests including a dedicated chapter on geothermal development in the national energy development plan, clarifying development goals and key regions by 2030.

“Research and formulate nationwide, inclusive financial subsidy and pricing support policies covering geothermal heating and power generation, making policy treatment roughly equal to wind and solar. At the same time, guide financial institutions to include geothermal projects in green credit and green bonds, establish a national geothermal industry development fund to attract social capital,” Nie recommends.

If these suggestions are implemented, geothermal will shift from a marginal role relying on policy “support” to a mature industry capable of self-sustaining growth.

Additionally, at the technical level, Chen Zemin, chairman of Wanjiang New Energy Co., Ltd., states that with continuous technological upgrades, geothermal energy is not only being widely used for urban heating but is also expanding into applications such as hospitals, schools, airports, high-speed rail stations, zero-carbon parks, high-end agriculture, and industrial steam. The expansion of application scenarios is opening new possibilities.

The government is also “supporting” geothermal development. On March 9, Beijing Municipal Development and Reform Commission issued a notice seeking public input on new energy heating projects supported by municipal government fixed asset investments. Shallow ground source heat pumps, medium-deep hot water geothermal, and medium-deep well heat exchange geothermal are included. Projects with a renewable energy heating installation ratio of 60% or higher will receive 30% of municipal government fixed asset investment support for new energy construction.

With accelerating technological iteration, policy environment improvements, and the continuous refinement of carbon market mechanisms, China’s geothermal industry is expected to enter a golden development period characterized by deep geothermal development, urban clean heating upgrades, industrial application expansion, and the realization of carbon asset value. The buried heat underground will be more fully “awakened.”

Text by | Our Reporter Qu Peiran

Produced by | China Energy News (cnenergy)

Edited by | Yan Zhiqiang