While temperatures above ground change a lot from day to day and season to season, temperatures in the upper 10 feet of the Earth's surface hold nearly constant between 50 and 60 degrees Fahrenheit. For most areas, this means that soil temperatures are usually warmer than the air in winter and cooler than the air in summer. Geothermal heat pumps use the Earth's constant temperatures to heat and cool buildings. They transfer heat from the ground (or water) into buildings in winter and reverse the process in the summer.
According to the U.S. Environmental Protection Agency (EPA), geothermal heat pumps are the most energy-efficient, environmentally clean, and cost-effective systems for temperature control. Although, most homes still use traditional furnaces and air conditioners,geothermal heat pumps are becoming more popular. In recent years, the U.S. Department of Energy along with the EPA have partnered with industry to promote the use of geothermal heat pumps.

Here is a nice simple diagram showing how it works!
[link]LINKS to my other stuff...My Twitter - A lot of blurbs and quotes!
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