This chapter addresses European climate policy and puts it in the context of strategic aspects of international climate policy. To explore the strategic nature of international climate policy-making, governments’ decision-making is modelled in game theoretical settings. Climate change mitigation is a global public good, as it is non-excludable and non-rival in consumption globally. Own provision of this public good and other countries’ provision are perfect substitutes, i.e., benefits of slowed global warming are equally enjoyed regardless of whether climate protection is produced domestically or abroad. The difference is only on the cost side, as a country’s own climate protection raises domestic costs while costs of climate protection abroad are borne by other countries. Consequently, there are free-rider incentives in international climate protection and as these incentives are prevalent among all countries, the global climate protection level remains at a sub-optimally low level. Given these free-rider incentives, ambitious climate change mitigation policy by the EU tends to require some additional justification. In this context, the EU regularly refers to significant non-global benefits of climate protection projects that arise additionally to the global primary benefits, i.e., the global benefits enjoyed from pursuing the primary aim of climate change mitigation policy, which is climate protection. These additional benefits, also called co-benefits or ancillary benefits, could accrue, among others, from the attainment of international technological leadership and local air quality improvement. The role of co-benefits in justifying ambitious climate policy is at least twofold as it includes a qualitative and a quantitative component. The quantitative component stresses the significance of ancillary benefit levels and thus raises the attractiveness of climate protection projects from a cost-benefit perspective. The qualitative component highlights that the risk of being exploited by free-riders is alleviated through the generation of benefits that are non-global. Due to the limited geographical extent of co-benefits like those enjoyed from the improvement of local air pollution, free-riding is regularly not a viable option for foreign countries. The emphasis on co-benefits might give the impression that ambitious climate policy is even a no-regret policy for the EU. (“No-regret options for GHG emissions reduction refer to options whose benefits (such as reduced energy costs and reduced emissions of local/regional pollutants) equal or exceed their costs to society, excluding the benefits of avoided climate change” (IPCC 2007a, p. 818).) The important category of co-benefits is taken into account in our game theoretic modelling of strategic behavior. In particular, we highlight co-benefits of climate action that are enjoyed because this action also contributes to attaining UN sustainable development goals (SDGs). Thereafter, we take a closer look at actual EU climate policy and its reference to striven beneficial co-effects for its member countries, notably regarding issues of energy policy and industrial competitiveness as foreseen in the “European Green Deal.” The case of EU climate policy is particularly interesting due to its mix of centralized (EU led) and decentralized (national) policy approaches. European climate policy targets, the EU Emission Trading System (ETS), policies regarding non-ETS sectors as well as newer developments (e.g., the “Fit for 55” package) are addressed in this section. Finally, we highlight a major threat for European countries resulting from climatic change, namely induced insecurity of electricity supply resulting in periods of heat and droughts. Such extreme weather event periods tend to become more frequent and they raise important cooling problems for the electricity sector. Hydropower supply is also threatened by such events as experience in recent years shows. The electricity insecurity problem is one that is prevalent in different world regions but we will focus on the case of Europe. Mitigating climate change tends to alleviate such threats and therefore brings about primary benefits by saving climate change costs in the power sector. As ongoing climate change is unlikely to be stopped in the near term, also adaptation to climate change in the power sector will become necessary.