Degrowth Is Not Free: What Europe’s Fossil Fuel Phase-Outs Actually Teach Us

picture by author, June 2026.

Degrowth is often discussed as a dispute between ecological necessity and economic orthodoxy. Advocates argue that wealthy economies cannot continue expanding material and energy consumption indefinitely while remaining within planetary boundaries. Critics respond that deliberately shrinking economic activity would undermine employment, public finances and political stability. Yet this familiar framing obscures a more concrete question: what happens legally, institutionally and financially when governments deliberately close environmentally harmful industries?

A seminar organised by Swedish network of legal studies at university of Uppsala, speech on degrowth and energy law offers a provocative answer: degrowth costs money. Its central claim is that governments cannot simply decree the disappearance of gas fields, coal mines or power stations. Sectoral contraction creates obligations involving energy security, workers, affected regions, asset owners and infrastructure replacement. Dr. Ruven Fleming from RUG, illustrates this through the closure of the Groningen gas field and Germany’s coal phase-out. The examples do not demonstrate that degrowth as a general social and economic project is impossible. They demonstrate that the managed decline of capital-intensive fossil-fuel sectors is legally and fiscally demanding under existing institutions.

Groningen: ending production does not end demand

The Groningen gas field provides the first example. Dutch gas production caused earthquakes, damage to buildings and profound distrust among residents. Continuing extraction became politically and ethically indefensible. The Netherlands therefore progressively reduced production and definitively closed the field by legislation taking effect on 19 April 2024. The closure was plainly justified by public safety. Nevertheless, it exposed a fundamental transition problem: eliminating domestic production does not automatically eliminate gas demand. Unless demand reduction, renewable generation, electrification, storage and alternative supplies are developed in advance, the state may replace domestic fossil extraction with imported fossil fuels.

The lesson is therefore not that Groningen should have remained open. Rather, it is that environmental prohibition and system transformation must be sequenced together. A closure policy without a replacement strategy may relocate environmental costs abroad, increase import dependency and expose consumers to volatile international markets. The relevant policy failure is not “degrowth,” but uncoordinated contraction.

Germany: who pays for stranded assets?

Germany’s coal phase-out illustrates a different dimension. Coal plants, mines and associated infrastructure are owned by companies whose assets lose value when the state accelerates closure. Workers and entire regions may also depend on the industry. Germany consequently combined its legally mandated coal exit with compensation, structural investment and regional support. Germany’s statutory end date remains no later than 2038, although some western lignite operations are scheduled to close by 2030. The European Commission ultimately approved up to €1.75 billion in support for LEAG, covering additional closure costs, social measures and lost profits. An earlier agreement provided €2.6 billion to RWE in connection with an accelerated 2030 phase-out. These payments support the speaker, dr. Ruven Fleming’s argument that phase-outs are expensive. But they also expose an unresolved normative question: which transition costs should taxpayers bear?

Compensation for workers, affected households and economically dependent regions has a strong justice-based rationale. Compensation for shareholders’ expected future profits is more contestable, particularly where companies invested despite increasingly foreseeable climate regulation. Treating all transition losses as equivalent risks socializing private investment risk while privatizing historical profits. The speaker also appears to conflate Germany’s coal exit with Vattenfall’s well-known investment arbitration against Germany. Vattenfall’s multibillion-euro claim concerned Germany’s accelerated nuclear phase-out after Fukushima, not the coal phase-out. The claim reportedly sought approximately €4.7 billion and ended through a broader settlement under which Vattenfall received €1.425 billion. Coal closure may involve state-aid control, statutory compensation and regional policy. Nuclear closure implicated constitutional property protection and investment arbitration. Groningen additionally involves liability for earthquake damage, decommissioning and disputes with extraction companies.

Does this refute degrowth?

Not really. Academic degrowth is not simply recession or the indiscriminate closure of productive activity. Its leading proponents describe it as a planned and democratic reduction of energy and resource use in wealthy economies, combined with redistribution, shorter working time, universal services and expansion of socially valuable sectors. Degrowth scholarship challenges “green growth” by questioning whether GDP can be decoupled from resource consumption and emissions at the scale and speed climate stabilization requires. Hickel and Kallis argue that available evidence does not establish sufficiently rapid global absolute decoupling under continued economic growth. Other degrowth scholars therefore propose reducing unnecessary or environmentally destructive production while maintaining or expanding healthcare, education, housing, public transport and renewable energy.

The speech does not engage fully with that position. It treats the closure of gas and coal sectors as examples of “degrowth,” although degrowth theorists would describe them as only one component of a broader redistribution and provisioning programme.

Conversely, degrowth literature sometimes understates the institutional complexity identified by the speaker. Calls to close harmful sectors must explain how to maintain electricity reliability, finance public services, manage pension funds exposed to fossil assets, allocate stranded-asset losses and prevent political backlash in dependent regions. A normative demand for “less” is inadequate without a legal theory of how decline will be governed and who will bear its costs. This is where the “agrowth” position developed by Jeroen van den Bergh becomes relevant. Agrowth treats GDP growth as neither an objective nor an automatic evil. Policy should directly regulate emissions, resource use and environmental damage; whether GDP subsequently rises or falls is secondary.

EU law does not require growth at any cost

The seminar's strongest doctrinal point, in author's opinion, concerns Article 3(3) of the Treaty on European Union. The provision does refer to “balanced economic growth,” but it also requires sustainable development, full employment, social progress and a high level of environmental protection. These are coexisting constitutional objectives, not a hierarchy in which GDP growth automatically overrides ecological limits. Article 194 TFEU similarly combines energy-market functioning, security of supply, energy efficiency and renewable energy. EU energy law therefore institutionalizes a balancing exercise: decarbonization must occur alongside reliability, affordability and solidarity. The EU’s Just Transition Mechanism reflects this logic. It is intended to mobilize approximately €55 billion between 2021 and 2027 for regions, industries and workers most affected by the transition, including retraining, economic diversification and clean infrastructure. At the same time, the EU’s withdrawal from the Energy Charter Treaty demonstrates that legal constraints are not immutable. The Union left because the treaty’s investor-protection system was increasingly regarded as incompatible with ambitious fossil-fuel phase-outs.

Planned decline requires legal design

The energy cases do not prove that degrowth is economically impossible. They prove something more useful: ecological contraction cannot be achieved by prohibition alone.

A credible phase-out requires advance investment in substitute capacity, demand reduction, grid infrastructure and regional diversification. Worker and community protection should be prioritized over automatic compensation for shareholders. Any corporate compensation should be conditional on remediation, transparency, closure commitments and waiver of further claims. The relevant alternative is therefore not growth versus degrowth in the abstract. It is a choice between disorganised decline, in which costs emerge through crises and litigation, and planned transformation, in which law deliberately allocates risks, benefits and responsibilities. Degrowth is not free but neither is continued fossil-fuel dependence. The central legal question is not whether transition creates costs; it is whether those costs are allocated transparently, fairly and consistently with Europe’s ecological obligations.

picture by Adam Bouganim, the Swedish network of legal studies, Uppsala, Sweden.June, 2026.

References

1. Consolidated Version of the Treaty on European Union, Article 3, [2016] OJ C 202/13.

2. Consolidated Version of the Treaty on the Functioning of the European Union, Article 194, [2016] OJ C 202/134–135.

3. European Commission, “The Just Transition Mechanism: Making Sure No One Is Left Behind.”

4. Hickel, J. and Kallis, G. (2020), “Is Green Growth Possible?”, New Political Economy, 25(4), 469–486.

5. Hickel, J., Kallis, G., Jackson, T., O’Neill, D.W., Schor, J.B., Steinberger, J.K., Victor, P.A. and Ürge-Vorsatz, D. (2022), “Degrowth Can Work—Here’s How Science Can Help”, Nature, 612, 400–403.

6. Kallis, G., Kostakis, V., Lange, S., Muraca, B., Paulson, S. and Schmelzer, M. (2018), “Research on Degrowth”, Annual Review of Environment and Resources, 43, 291–316.

7. van den Bergh, J.C.J.M. (2011), “Environment versus Growth—A Criticism of ‘Degrowth’ and a Plea for ‘A-Growth’”, Ecological Economics, 70(5), 881–890.

8. Srivastav, S. and Zaehringer, M. (2024), “The Economics of Coal Phaseouts: Auctions as a Novel Policy Instrument for the Energy Transition.”

9. Regulation (EU) 2021/1056 of the European Parliament and of the Council establishing the Just Transition Fund, [2021] OJ L 231/1.

10. Government of the Netherlands (2024), “Wet sluiting Groningenveld gaat per 19 april 2024 in,” 18 April 2024.

11. Vattenfall AB and Others v Federal Republic of Germany, ICSID Case No ARB/12/12.

12. European Union (2024), Decision on the Union’s withdrawal from the Energy Charter Treaty.