According to the Lisbon declaration from 2000 the goal of European Union is to become by 2010 the most competitive and dynamic knowledge-driven economy and by 2025 a sustainable knowledge society. The EU however faces some strong challenges on the road toward these goals and is evidently lagging behind both USA and Japan. Our analysis is based on six dimensions of these challenges, including the economic challenge, the demographic challenge, the scientific challenge, the challenge of higher education, the challenge of European governance and identity/system of values, and the environmental/ecotechnological challenge. We argue that if we are to provide a sustainable secure environment and prosperity for next generations, we have to act now at least with developments in particular in the direction of clean, cheap, and renewable energy sources with an emphasis on basic, curiosity driven research which through scientific breakthroughs, is the only realistic solution to solving world's energy requirements. Such an action could for example facilitate the transition from fossil fuels to solar power in a relatively short time of about two decades, and help EU achieve its declared sustainability targets.