In this chapter, we lay out the difference between the economics of allocation and creation. We explain how innovation, which is the most important process involved in reducing greenhouse gas emissions, creates resources that the economy uses thereafter. We show that there is no optimal resource creation strategy because innovation generates more potential directions for economic growth than we can possibly identify. This shows that the economic problem of climate policy is not about allocating scarce resources, but rather it is about creating the resources that we need. But the allocation way of thinking is really hindering sensible climate policymaking, and this is potentially why we are making so little progress.