Innovation, investment and climate policies are compatible; moreover it is essential to combine them if the sector is to achieve genuine sustainable competitive advantage and success in a decarbonising global economy. As the widely divergent opinions expressed and hotly debated during the discussions on the transitional and structural reforms of the EU ETS illustrate, there is urgent need an evidence-based analysis. This research project aims at assessing how production and emission volumes, the energy and CO2 efficiency and competitiveness of companies in the Energy Intensive Industries have evolved prior and during the EU ETS, how the EU ETS may have influenced investment and operational choices at the company level and what this implies for the different options for its structural reform.