In Germany and the EU, climate protection and energy system transformation are implemented by a large number of measures. In addition to the EU Emission Trading System, national measures – such as the German Renewable Energy Sources Act or the promotion of energy-efficient building refurbishment – are taken. This policy mix causes many controversies around the question how an effective and efficient portfolio of instrument should be designed in order to provide incentives for emission reduction and promote innovation at the same time. The scientific community offers manifold possible solutions that are, however, partly contradictory. The fourth Forum Climate Economics focused on unravelling some of these controversies.