- Madrid wants a dedicated European adaptation fund backed by a continuing levy on oil and gas profits, charges on luxury aviation and potentially common EU debt.
- The proposal goes beyond an emergency windfall tax by trying to create a stable, polluter-pays revenue stream for resilience and disaster response.
- Agreement will be difficult, but the plan forces a question governments have largely deferred: who pays for adaptation as climate losses become structural rather than exceptional?
Spain has asked the European Commission to consider a permanent levy on oil and gas company profits to finance climate adaptation, seeking to turn the political momentum behind temporary windfall taxes into a durable source of resilience funding.
The proposal, sent by ecological transition minister and third deputy prime minister Sara Aagesen to senior Commission figures, calls for a dedicated EU adaptation fund. Madrid also wants levies on private jets and other luxury flights, consideration of new common EU borrowing and a public-private reinsurance mechanism capable of pooling climate risks across member states.
The intervention follows a summer of damaging drought and wildfires in western and southern Europe and arrives as climate commissioner Wopke Hoekstra prepares a new European climate-resilience framework for later this year.
The Spanish paper also proposes a permanent rapid-response system with shared European resources, including an aircraft fleet for fighting wildfires, alongside binding short, medium and long-term resilience targets. Climate risk would have to be incorporated systematically into public planning and investment decisions.
Resilience revenue
The political novelty is the proposed tax base. The EU used a temporary “solidarity contribution” on excess fossil fuel profits during the energy crisis that followed Russia’s invasion of Ukraine. More recently, Germany, Italy, Austria, Poland, Portugal and Spain have sought talks on a mechanism to tax windfall oil profits associated with the Middle East supply shock.
Madrid’s adaptation proposal is broader. It envisages a stable levy that would not switch off when commodity prices and company earnings normalise. That would change the rationale from capturing an unexpected gain to applying a continuing polluter-pays principle, with revenue hypothecated to protection from heat, fire, flood and drought.
That distinction will sharpen industry opposition. A permanent charge gives governments a more predictable funding stream, but companies will argue that it increases fiscal uncertainty and reduces capital available for energy investment. The design would also have to address volatile profits, cross-border groups and the risk that member states lose revenue they would prefer to collect nationally.
Embedding resilience
Neither the levy nor common borrowing has been agreed. Taxation, joint debt and distribution between countries are among the EU’s most politically contentious issues.
Northern and fiscally conservative states may resist mutualised borrowing, while governments with domestic oil and gas industries could oppose a sector-specific charge. Nevertheless, its timing gives it leverage. The Commission’s European Climate Adaptation Plan is due in the second half of 2026 and is intended to embed resilience across economic and infrastructure policy.
Spain is offering both an institutional model and an answer to the financing question before that framework is settled.
For the UK, there would be no direct tax liability because it sits outside the EU. But the consequences could still travel through European-headquartered energy groups, insurance markets and investor expectations. The proposal also lands as the UK continues its own argument over the Energy Profits Levy and how to fund flood, heat and water resilience.
Its larger challenge is hard to avoid: adaptation has moved from a discretionary environmental budget to an infrastructure requirement, yet fiscal systems still treat much of its cost as an emergency. Spain wants Europe to make that cost permanent, visible and partly payable by fossil fuel producers.
