This book introduces the theory of resource misallocation and its applications in the context of energy transition. Technological advancement is often regarded as the primary driver of energy transition and, ultimately, the achievement of net-zero emissions. However, technological progress is inherently long-term and highly uncertain. Additionally, there is an ongoing debate regarding the trade-offs between reducing carbon emissions and fostering economic growth. Resource reallocation presents a potential solution, as it can enhance efficiency, boost productivity, and effectively reduce carbon emissions. The authors offer insightful arguments supported by both theoretical and empirical analyses. This book is suitable for undergraduate and advanced-level readers and serves as a valuable resource for academic researchers and policymakers alike.