Beyond Carrots and Sticks: two-way contracts for difference from 2027

Dr. Wang Zhiqiang published Beyond Carrots and Sticks in the Dr. Wang Insights newsletter on 11 October 2026, arguing that supporting decarbonisation does not require accepting every policy instrument designed to achieve it, and that a technology must move from policy-supported to economics-supported.

Part of that is already law. Regulation (EU) 2024/1747, of 13 June 2024, inserted Article 19d into Regulation (EU) 2019/943: contracts under direct price support schemes for investment in new generation concluded on or after 17 July 2027 must take the form of a two-way contract for difference or an equivalent scheme.

The provision names wind, solar, geothermal, hydropower without reservoir and nuclear. Two-way means receiving when the market price falls below the strike and paying back when it rises above: revenue gains a contracted floor and ceiling, and the contract term becomes what the lender reads.

For a Brazilian project seeking foreign capital, the due diligence question becomes concrete: what revenue is contracted, for how many years, and who absorbs the price deviation.