Renewable energy comes from natural resources such as sunlight, wind, rain, ocean tides, geothermal heat and alternatives to gasoline. These energy sources have the advantage of producing energy while reducing emission of greenhouse gases (GHG) and other air pollutants such as nitrogen oxides and sulfur dioxide. Renewable energy technologies include photovoltaic solar cells, wind turbines, geothermal powerplants, hydroelectricity and biomass conversion.

While renewable sources of electricity provide important air quality and climate change advantages over fossil-based alternatives, renewable energy is at a competitive disadvantage in most power markets at current electricity prices. Project developers generally rely on incentive payments to overcome capital cost and financing hurdles.

Renewable energy mandates in the form of renewable portfolio standards are helping to increase penetration of clean renewable energy technologies in the electricity sector. In the European Union, leaders have agreed that 20 percent of their member-states' energy should be produced from renewable fuels by 2020. In the U.S., 25 U.S. states, plus the District of Columbia, have adopted mandatory renewable portfolio standards.

A cap-and-trade program or carbon tax for greenhouse gases could substantially level the playing field among power technologies by ensuring that the climate costs of conventional fuel resources are built into energy prices. CCAP's efforts to design and advance a carbon price and to use allowance value to support advanced energy technologies will help encourage new renewable energy generation as part of the solution to climate change.

CCAP's analytical work also informs the policy debate. For example, modeling work conducted for the New York Greenhouse Gas Task Force illuminated the relationship between renewable energy and cap-and-trade, finding that renewable energy can achieve significant emissions reductions and facilitate more aggressive emissions caps. CCAP has also looked at cap-and-trade designs that will boost renewable energy and the relative impacts on emissions of different forms of renewable energy in different power markets.