By transferring solar energy from the ground into a building, there is reduced need for generation and transmission of electricity, or less need to drill and transport fossil fuels, with an accompanying reduction in the emission of pollutants at all stages. Data from governments in both Canada (Natural Resources Canada) and the United States (Environmental Protection Agency) indicate that geoexchange systems are the most benign space conditioning technology on the market today in terms of environmental impact.

Water is taken from a lake or a well, circulated through the heat pump where the temperature is reduced slightly, and then discharged into the same source to complete a cycle. There is no indication that a minor temperature change has any adverse effects on the environment, although due regard to sensitive aquatic areas is provided at point of discharge, in regulations.

The pipe used is a high-density polyethylene plastic that has no environmental impact on the surrounding ground. It is virtually impossible to destroy a ground loop under normal conditions but, in an extreme case of accidental cutting of the pipe, the drop in system pressure will cause the unit to stop pumping. If any fluid does leak before system shutdown, the anti-freeze is (usually) ethanol diluted to 20 percent of volume, and would have a minimal impact on the surrounding ecosystem.

Compressors use a refrigerant (often referred by a trademark name 'freon') in the pressure cycle, and industry specifications assume that all compressors leak a small amount over time, with a detrimental effect on the ozone layer. The Montreal Protocol was a global treaty to mandate a transition from refrigerants that were negative, to more benign mixtures, and geoexchange systems use compressors with refrigerants that offer the lowest possible impact on the environment. Most units currently use R22, but some units now offer 410A refrigerant.