The environmental impacts of mobile phones are related to the use of resources, process chemicals and en-ergy consumption in all production stages, energy use during the use phase and the considerable amount of potentially hazardous substances in the components. The mobile phone market is global and corresponds to a fragmented supply chain. The products tend to have a short lifetime and new features and increased data transmission are among some recent innovations. These innovation dynamics and the market trends are some basic characteristics that environmental policy has to consider, when making a mix of different policy instruments. This report analyses the challenges that policymaking deals with and evaluates how different policy tools can influence the future innovation of more environmental friendly mobile phones.