The European Union’s commitment to moving to a low carbon economy, including a reduction of greenhouse gases of at least 20% below 1990 levels by 2020, raises potential competitiveness concerns in trade-exposed, energy intensive EU industries. This research project explored sectoral approaches as a new set of options to address potentially adverse competitiveness impacts of key industries exposed to international competition and to engage emerging economies on a lower emission path. To this aim the study analysed alternative designs of global sectoral approaches, further developed a coherent economic modeling framework and quantitatively assesses the macroeconomic and environmental effects of the respective designs.