Institutions matter. How the EU member-states take decisions in the Council of Ministers, and the way in which the Council interacts with the European Commission, Parliament and Court of Justice, determine whether the EU is effective. The EU's institutions and decision-making procedures will never be perfect. But they need to function well for the EU to achieve objectives such as liberalising energy markets or fighting cross-border crime, and when dealing with outside powers such as Russia, China and the US.

The Lisbon treaty - finally ratified in 2009 - will bring about a thorough revision of the way the EU goes about its business. The treaty introduces simpler, clearer procedures for decision-making; consolidates the EU's foreign policy machinery; partially abolishes the rotating presidency; and makes it easier for the EU to help fight terrorism, crime and illegal immigration.

EU member-states will take time to adjust to the changed political realities created by the treaty. These include a newly powerful European Parliament with a stronger say over budgetary and security matters, the first permanent presidency of the European Council, Herman van Rompuy, and a much more powerful High Representative for foreign policy, Catherine Ashton. EU leaders will also have to figure out the details of new arrangements such as the quasi-diplomatic 'external action service'.

The EU will have to think creatively about how the treaty's myriad of reforms can be best implemented for it to live up to tomorrow's challenges. The CER looks past out-dated debates about inter-governmental co-operation versus a more federal EU. We propose changes that will make the EU work better. These can be pragmatic, such as our suggestions to improve EU foreign policy making. Or they can be radical, such as our proposals for an entirely new EU institution to fight climate change.