The issues addressed in the Communication Analysis of options to move beyond 20 percent greenhouse gas emission reductions and assessing the risk of carbon leakage (COM(2010) 265) opens the discussion about a redesign of the energy and climate policy of the EU. Our analysis of the Communication reveals the following key findings: • A more ambitious reduction target for 2020 needs to be embedded in a long-term strategy for GHG reductions until 2050. • The new challenges for international climate policy have shifted from controversies about targets to a competition of technologies. • In this competition for technological innovation the EU is facing a widening technology gap relative to the USA and China. • Any future emissions reduction policies should therefore be closely tied to an ambitious technology initiative. • The estimated costs in the Communication of 0.54 percent of GDP in order to achieve a 30 percent target need a detailed explanation. • According to our analysis, a supporting technology initiative requires investments beyond 2 percent of GDP each year and new finance mechanisms.