CAP Pillar 2 policies and Rural Development Programmes (RDPs) reflect a broad range of governance styles and policy priorities, as well as significant devolution to regions and/or provinces within Member States. The processes supporting this new style of policymaking have become increasingly differentiated. The Europe 2020 document identifies significant “new challenges” facing the EU’s rural areas, notably climate change, sustainable water management and renewable energy generation. All of these “new challenges” impinge on EU rural development policies, and imply a need for significant shifts in priorities and actions. This paper draws from recent research carried out within the RuDI project, to analyse the capacity of the current Pillar 2 approach to meet these new challenges. The research notes a high and perhaps increasing level of bureaucratisation of EU rural development policy, but at the same time thr growing “territorial” nature of RDPs and the evolution of active partnerships at both strategic and local levels. Examples of innovative action within Estonia and the United Kingdom, as well as a brief budgetary analysis, enable a discussion of RDPs’ capacity to accommodate a new challenges agenda, and both positive and negative points are identified. The paper concludes by considering how changes to the Pillar 2 framework after 2013 could enhance its capacity to plan for, and execute, more ambitious responses.