The overarching implications of the EU 2020 targets for Austria call for a fundamental restructuring of the Austrian energy sector towards increased energy efficiency. Two guiding principles for this restructuring are required in order to be compatible with the targets for greenhouse gas emissions and renewables (RES) expected for Austria: final energy consumption needs to be stabilised at the levels of 2005; renewable energy sources need to be expanded at least by 40 percent. For the final negotiations on phase 3 of the EU Emissions Trading System we propose contributions on three issues: 1. operational procedures for dealing with carbon leakage and competitiveness in all sectors that provide criteria for allocating free allowances: 2. empowering the carbon market by extending the task of the emissions allowances issuing carbon authority to control the liquidity of the carbon market in view of stabilising the carbon price; 3. designing the auctioning mechanism by considering timing and auctioning as a strategic instrument for enhancing the carbon market and considering unified auctioning with revenues split among EU countries. Similarly we suggest for the final negotiations on the RES Directive improvements that overcome discrepancies between national RES targets and available resources for implementation. This requires in particular improved cooperation between EU countries for a better mapping of targets and potentials.