The issue of global climate change is increasingly impacting on the power sector in Europe. This in-depth company case study examines how the EU Emissions Trading Scheme (EU ETS) has affected the Norwegian power company Statkraft – Europe’s largest producer of renewable energy. The study assesses whether and how Statkraft’s climate strategy changed in the period 2003–2009, evaluated on a continuum from ‘defensive’ to ‘indifferent’, ‘offensive’ and ‘innovative’ climate strategies; and how the EU ETS has influenced these changes. Statkraft’s climate strategy emerges as increasingly ‘offensive’, due not least to the company’s long-term plans for expansion in flexible and renewable energy sources. The reasons for not classifying Statkraft’s climate strategy as ‘innovative’ relate to the company’s focus on old renewables and the limited emphasis on innovation in new climate-friendly technologies. The explanatory framework builds on the multi-level governance approach, examining how factors from the EU, national and company levels influence climate strategies through mechanisms of risks and opportunities. The literature to date has focused on how external factors influence corporate climate strategies. This thesis finds that expectations of a more stringent and predictable EU ETS, together with perceptions of complementary EU climate goals and other policies, have provided Statkraft with a solid strategic framework for an offensive climate strategy. However, the ownership and renewables policies of the Norwegian authorities have had a restraining effect, making it harder for Statkraft to adopt an innovative strategy in the short or long term. To fully explain changes in Statkraft’s climate strategy, the study utilizes a third perspective: examining factors in the company itself. Statkraft’s corporate identity, shaped before the introduction of the EU ETS, relies heavily on technological specialization, well-established renewables and the role as Europe’s peak supplier. Despite some internal attempts to change this identity by focusing on innovation, new market opportunities and portfolio diversification, efforts have been too few and random for Statkraft to be termed ‘innovative’ in the sense applied in this thesis. The major analytical implication of this study is that accurately understanding changes in corporate climate strategies requires drawing on explanatory factors from different levels –company-specific factors in particular. Further in-depth company studies are essential for fully understanding the effects of climate change regulations.