Creating Carrots and Sticks describes the enthusiasm for wind and solar energy—referred to as variable renewable energy—even while dispatchable hydroelectric and nuclear energy provide more carbon-free power. The chapter then details subsidies necessary to make greenhouse-gas-free energy competitive in markets dominated by fossil fuels, particularly tax credits, portfolio standards, and contracts for difference. Fossil fuel penalties center on flat taxes and cap-and-trade regimens. An examination follows of the deregulation of electric grids, the creation of wholesale electricity markets, and resulting disincentives to making large long-term investment in renewable or nuclear power plants.