The document discusses how voluntary renewable energy markets may be affected if carbon is regulated through a cap and trade system. It finds that under a cap and trade program, renewable energy sources would no longer necessarily reduce total carbon emissions unless allowances are set aside for renewables or the cap accounts for future renewable energy growth. This could limit the ability of renewable energy certificate markets to market emissions reductions benefits to consumers and potentially reduce demand for voluntary renewable energy purchases. The impact will depend on how individual cap and trade programs are designed and whether they offer provisions like retiring allowances on behalf of renewable energy.

1. Implications of Carbon Regulation for Renewable Energy Markets Lori Bird, NREL Energy Analysis Seminar July 12, 2007

3. U.S. Voluntary Green Power Sales EPA Green Power Partners purchased 6.9 billion kWh of green power in 2006. 3,400 2,450 1,840 1,280 Utility Green Pricing ? 2,150 2,650 1,900 Competitive Markets ? 3,890 1,720 660 REC Markets 12,000+ 8,490 6,210 3,840 Retail Total 40%+ 37% 62% -- % Change 2005 2006 2004 2003 (in millions of kWh)

4. Sources: UCS RPS targets; NREL voluntary markets Voluntary market projections assume 35% growth; actual growth ranged from 35% to 60% from 2003 to 2006

5. Top 20 U.S. Green Power Purchasers (as of April 2007) MWh/yr 1. PepsiCo 1,105,045 2. Wells Fargo & Company 550,000 3. Whole Foods Market 463,128 4. US Air Force 457,500 5. Johnson & Johnson 400,703 6. US EPA 329,880 7. LA County Sanitation 196,003 8. Starbucks 185,000 9. DuPont Company 180,000 10. US Dept of Energy 165,063 11. Vail Resorts 152,000 12. HSBC North America 124,544 13. Cisco Systems, Inc. 124,106 14. Staples 121,404 15. New York University 118,616 16. World Bank Group 114,735 17. University of Pennsylvania 112,000 18. IBM Corporation 109,704 19. US Dept of Veterans Affairs 90,000 20. NatureWorks LLC 89,000 Source: U.S. EPA Green Power Partnership

10. Greenhouse Gas Accounting Definitions Examples Definition Forestry projects, methane capture Reductions achieved through projects outside of scope of company’s indirect or direct emissions Offsets Employee travel, manufacturing Other emissions outside of direct control Other Indirect (scope 3) Power purchases Emissions outside of direct control of entity Indirect Emissions (scope 2) Emissions from onsite generation, other energy use Emissions controlled by organization Direct Emissions (scope 1)

19. Emerging Cap and Trade Programs RGGI Western States Considering Joining RGGI

24. Current Voluntary Market REC Values Source: Evolution Markets Prices converted to $/metric ton avoided assuming average regional CO2 emissions rate from Egrid (U.S. EPA 2004). CCX prices $2-$4.50/MT EU ETS prices $8-40/MT 2.80-7.90 8.20-13.70 1.50-5.00 $/MT CO2 avoided 1.80-5.00 3.00-5.00 1.30-4.50 $/MWh National WECC/CA SPP Region Voluntary Market REC Prices for New Wind, 2006