Despite　the　small　share　in　total　energy　investments,　energy　investments　in　research　and　development　(R&D)　incubate　early-stage　energy　technology,　improve　energy　efficiency　in　the　manufacturing　processes,　and　facilitate　the　expansion　of　green　energy　systems.　This　chapter　distinguishes　R&D　investments　in　energy　efficiency　from　other　energy　R&D　investments.　Our　research　formulates　the　way　in　which　R&D　investments　in　energy　efficiency　enhance　energy　production　through　efficiency　knowledge　accumulation.　Our　research　explores　how　R&D　investments　in　energy　efficiency　affect　the　other　types　of　energy　R&D　investments,　total　energy　R&D　investments,　and　the　share　of　energy　R&D　investments　in　the　capital　goods　sector.　Also,　the　study　examines　the　impact　of　R&D　investments　in　energy　efficiency　on　economic　welfare,　economic　structure,　carbon　taxes,　energy　transition,　carbon　emissions,　and　climate　change.　The　study　simulates　three　emissions　abatement　scenarios:　an　optimal　abatement　scenario,　a　2 °C　policy　scenario,　and　a　1.5 °C　policy　scenario.　Our　study　provides　a　reference　level　for　the　amount　of　R&D　investment　in　energy　efficiency.　Policy　makers　may　overinvest　in　other　energy　R&D　investments　under　all　abatement　scenarios　if　they　overlook　R&D　investments　in　energy　efficiency.　R&D　investments　in　energy　efficiency　also　bring　considerable　economic　gains,　however,　its　climate　impact　is　not　significant.　©　2021,　ADBI.