Heat pumps, which transfer heat from one environment to another to provide heating and cooling, are considered a key technology for decarbonizing the building sector. However, geothermal heat pumps have been adopted slowly, owing to high investment costs and public distrust. In this Review, we discuss opportunities for sustainable and risk-conscious application of shallow geothermal energy (SGE) and identify suitable areas and outline the benefits and impacts of different SGE technologies. Globally, many regions have wide areas suitable for SGE, yet uptake rates remain low. For example, a third of Germany is hydrogeologically suitable for aquifer thermal energy storage systems, but only two systems were in operation in 2021. The environmental benefits of SGE are substantial, as greenhouse gas emissions can be reduced by up to 88% in European Union countries compared with conventional thermal energy systems. Environmental impacts on groundwater quality and ecosystem functions are minor as SGE-induced temperature increases are typically in the range of 5–10 K. However, owing to the limited number of assessments, benefits and impacts of subsurface cooling remain largely unknown. Widespread and sustainable operation of SGE will require subsurface management with particular focus on infrastructure, drinking water quality and thermal alterations.