First Glance commentary published by Bruegel on September 8, 2026.
In the wake of a particularly difficult summer of extreme heat and extensive wildfires, Spain has provided what could prove a significant push for more measures to cope with the impact of climate change. In early September, Madrid called for binding European Union climate adaptation targets, five-yearly climate-risk assessments, a dedicated EU Climate Adaptation Fund, stronger common emergency-response capabilities and new financial instruments such as climate-risk bonds. It has also raised the possibility of a levy on oil and gas profits, or common EU borrowing, to finance EU adaptation measures.
The Spanish push comes ahead of a new European Climate Resilience and Risk Management framework, expected later this year from the European Commission. This will come in the context of climate shocks no longer being exceptional and of mounting economic losses from weather and climate-related extremes – an estimated €822 billion in the EU between 1980 and 2024, about a quarter of which was concentrated in the four years from 2021 to 2024.
The EU has traditionally focused on climate mitigation efforts, but adaptation is becoming vitally important, determining how much damage Europe suffers from the warming that can no longer be avoided. Moves to improve adaptation are welcome but must take into account that climate damages could become a new European fault line. Climate damage is distributed unevenly across regions and the fiscal capacities to invest in resilience and absorb losses differ. Leaving adaptation to national governments alone could therefore amplify economic differences.
Furthermore, climate losses are underinsured. National governments face increasing demands to act as insurers of last resort, diverting public resources from productive, resilience-enhancing investment towards post-disaster relief.
Knowledge about what needs to be done to better adapt to climate change is often local. For example, it involves local planning for cooling infrastructure for cities, drought management and even labour legislation on working conditions in extreme heat. But the EU must play a major role in three main areas.
First, national adaptation strategies differ hugely in goals, methodology and implementation. This makes it hard to identify where resources should be allocated. Common governance, involving a cycle of climate risk assessments and national adaptation plans, with measurable objectives and independent evaluation, would help prevent freeriding on shared insurance mechanisms.
In this context, Europe needs to move – as Spain has suggested – towards a genuine climate-risk sharing system. The current system of governments intervening after catastrophes, while private insurance coverage is inadequate and increasingly expensive in high-risk areas, is inefficient and ultimately unsustainable.
The European Central Bank and EIOPA have proposed a European public-private reinsurance scheme combined with an EU disaster fund, access to which would be conditional on countries implementing risk-reduction measures. Contributions to, and support from, such a mechanism should depend on whether countries follow through on their adaptation pledges. This would help overcome the typical tension between solidarity and moral hazard.
Second, all EU investment should follow a ‘resilience by design’ principle. Electricity grids, transport networks, water systems, hospitals and other infrastructure financed or regulated by the EU should be built to withstand the climate conditions expected during its lifetime. Climate-risk assessments should be embedded systematically in national and regional investment plans and major infrastructure decisions. Adaptation should thus become a much clearer priority in the 2028-2034 EU budget, which is presently being negotiated.
Third, more climate resilience knowledge is needed. The experiences of different policy approaches in EU countries and across the world should be learned from. Adaptation should be science-driven.
Spain is right to put climate adaptation and its financing on the table. Revenue sources – national contributions, new EU-level resources, levies or common borrowing – need careful discussion. This debate should not distract from the more fundamental question of what should be financed collectively and the governance of that financing. For climate risks that cross borders or for which pooling resources generates clear European value added, European financing is fully justified. When it comes to European insurance against large climate shocks, governance matters.
Climate resilience must ultimately be understood in the same way Europe increasingly understands defence and energy security: as a prerequisite for economic security. It is also a competitiveness issue. Infrastructure that cannot withstand rising temperatures, floods or droughts will generate stranded assets, higher insurance costs, supply disruptions and greater fiscal liabilities.
The forthcoming European Climate Resilience and Risk Management framework should therefore build on Spain’s proposals and shift from responding to climate disasters to managing climate risk before disasters strike, while moving from fragmented national adaptation policies to a true European climate-resilience architecture.
This First Glance commentary was written by Simone Tagliapietra (Bruegel) and Guntram B. Wolff (Bruegel) as part of Bruegel's First Glance series and published on September 8, 2026. Find the link to the First Glance here.
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