A closed loop system uses a continuous loop of buried polyethylene pipe. The pipe is connected to the indoor heat pump to form a sealed, underground loop through which an environmentally friendly antifreeze-and-water solution is circulated. A closed loop system constantly re-circulates its heat-transferring solution through the pipe, unlike an open loop system that consumes water from a well. Closed loops can be trenched horizontally in areas adjacet to the building. However, where adequate land is not available, loops are installed in vertical boreholes. Any area near a home or business with appropriate soil conditions and adequate square footage will work.