This chapter examines to what extent and how the EU ETS has influenced the climate strategies of major pulp and paper companies. Aggregate changes in the pulp and paper industry are analysed by investigating the EU ETS position of the Confederation of European Paper Industries (CEPI), the industry association of the European pulp and paper industry, and the climate strategies of the ten largest pulp and paper companies in the EU ETS. The sector study is followed by a study of two pulp and paper companies, Svenska Cellulosa Aktiebolaget (SCA) and Norske Skog with their respective headquarters in Sweden and Norway, to shed more light on the short- and long-term effects of the EU ETS. The study shows that although the EU ETS has strengthened ongoing abatement efforts in the pulp and paper industry, emissions trading has had a rather limited effect on innovation activities in the industry thus far.