Representing a chapter within the European Competitiveness Report 2008, this research project assesses the economic impacts of the 2008 renewables and climate change policies until 2020 and beyond, particularly considering environmental industries. In January 2007, the European Commission has adopted a comprehensive package of measures – the EU energy package – to establish a new strategy towards an increasing sustainability, security of supply and competitiveness in Europe. In order to implement these objectives, the European Commission proposes a set of regulations, including the continuation of the EU Emission Trading Scheme (EU ETS), an improvement in energy efficiency as well as an increase of the level in renewable energy in the EU’s overall energy mix to 20 percent in 2020. The overall objective of the project is to assess the macroeconomic and environmental impacts of the specific implementation of the EU energy package. Additionally, the analysis of potential future developments – which go beyond the envisaged EU energy package regulations – will be conducted, such as linking the EU ETS to emerging emission trading schemes outside Europe. To this aim the study analyses the current economic status quo of environmental innovations, further develops a comprehensive and coherent economic modelling framework and quantitatively assesses the macroeconomic and environmental effects of respective regulations.