Spain Proposes EU Climate Adaptation Fund

Spain’s vice president and minister for Ecological Transition, Sara Aagesen, has spearheaded a call for the creation of an EU climate adaptation fund.

The Spanish Government’s recommendations were laid out in a letter and policy paper, seen by the Financial Times.

It calls for efforts to mobilise resources across different countries to respond when climate-related damages occur that exceed a nation’s ability to respond to them.

Efforts would be part-funded by a tax on oil and gas companies.

Spain has consistently called for such measures to be introduced and last year approved proposals for a State Pact to respond to climate change. The Pact aims to mobilise funds to respond to disasters and finance prevention methods.

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Wildfire damages

In Spain, one of the country’s largest ever wildfires occurred earlier this year in the Sierra Oeste region west of Madrid.

In France, fires in the southwest affected parts of Gironde and Landes, with an area several times the size of Paris burning near Bordeaux.

The EU has warned that ‘all of Europe’ could be on fire, as dry conditions and high temperatures persist, with concerns extending to countries including Greece, Italy and parts of Central Europe.

Extreme weather generated more than $120bn in economic losses worldwide last year. In 2025, direct losses reached $260bn, but less than half were insured. Across the EU, only around one quarter of climate-related losses are covered by insurance, with insurance penetration falling to as little as 5% in some countries.

The European Commission is tasked with delivering a new climate adaptation and resiliency strategy this year, but has stopped short of back a windfall tax on fossil fuels.

The finance ministers of Germany, Austria, Italy, Portugal, Poland and Spain have all called for a Europe-wide taxation to be introduced and will be discussed further when finance ministers meet again this month (September).

Fossil fuel firms including BP, Chevron, and Shell are expected to double their combined net income to $45bn this quarter, with research stating that emissions from the world’s largest oil and gas businesses were sufficient to cause one quarter of heatwaves experienced in the last 20 years.

Oxfam states that profits are growing alongside emissions. Analysis of academic data published in Nature by the charity found that emissions from these companies were “sufficient to cause” around a quarter of heatwaves reported globally between 2000 and 2023.

EU Climate Adaptation Fund

Spain’s proposal for an EU climate adaptation fund aims to mobilise resources across different countries to respond when climate-related damages occur that exceed a nation’s ability to respond to them.

The fund would be partially financed by a tax on oil and gas companies.

This initiative aligns with Spain’s consistent calls for such measures to be introduced and its recent approval of proposals for a State Pact to respond to climate change.

The European Commission is tasked with delivering a new climate adaptation and resiliency strategy this year, but has not yet committed to backing a windfall tax on fossil fuels.

Finance ministers from Germany, Austria, Italy, Portugal, Poland, and Spain have called for a Europe-wide taxation to be introduced and will discuss the proposal further in September.

Fossil Fuel Companies and Emissions

Fossil fuel firms including BP, Chevron, and Shell are expected to double their combined net income to $45bn this quarter.

Research indicates that emissions from the world’s largest oil and gas businesses were sufficient to cause one quarter of heatwaves experienced in the last 20 years.

Oxfam states that profits are growing alongside emissions, with analysis finding that emissions from these companies were “sufficient to cause” around a quarter of heatwaves reported globally between 2000 and 2023.

Conclusion

Spain’s proposal for an EU climate adaptation fund represents a significant step towards addressing the increasing economic losses from climate-related damages.

The fund, if implemented, could help bridge the gap in insurance coverage for climate-related losses across the EU.

The involvement of major fossil fuel companies in funding this initiative could also serve as a means of accountability for their contributions to climate change.