This chapter explores the impact of various policy instruments to stimulate R&D and technology deployment, using a model that incorporates the process of technological change and innovation, i.e. induced technological change. It starts with a review of spending trends in energy-related R&D, followed by an assessment of the impact of R&D policies and spending on innovation and technology deployment. The chapter continues with an analysis of the effects of carbon pricing and technology policies on the costs of mitigating climate change. Finally, it addresses the question of whether technology policies will work in the absence of carbon pricing.