Across the U.S., over 100 cities and two states (Hawaii and California) plus the District of Columbia have already made the commitment to transition to 100% clean or renewable energy in the coming years. In the past year, Xcel Energy became the first large utility to commit to 100% renewable energy, and the University of California system committed to 100% clean energy on a short timeline by 2025. Nearly three-quarters of the Fortune 100 companies have adopted sustainability and renewable energy goals.
Achieving these ambitious public and private goals will eventually require replacing much of the current fleet of generation that relies heavily on carbon-emitting coal and natural gas. But such an ambitious transition to clean energy is unlikely to happen on its own, and it is unlikely to be achieved cost-effectively using traditional policy instruments. What’s needed now is to acknowledge that transitioning to 50% or 100% carbon-free energy will require some fundamentally different and better policy tools. In this whitepaper, we propose a new forward clean energy market (FCEM) in order to harness competition and innovation. The FCEM would provide a competitive, regional market for clean electricity attributes. It would enable states, cities, and customers to achieve their ambitious carbon targets at lower costs. Furthermore, it would complement existing competitive wholesale electricity markets.