  We present an approach to the problem of vacuum energy in cosmology, based on
dynamical screening of Lambda on the horizon scale. We review first the
physical basis of vacuum energy as a phenomenon connected with macroscopic
boundary conditions, and the origin of the idea of its screening by particle
creation and vacuum polarization effects. We discuss next the relevance of the
quantum trace anomaly to this issue. The trace anomaly implies additional terms
in the low energy effective theory of gravity, which amounts to a non-trivial
modification of the classical Einstein theory, fully consistent with the
Equivalence Principle. We show that the new dynamical degrees of freedom the
anomaly contains provide a natural mechanism for relaxing Lambda to zero on
cosmological scales. We consider possible signatures of the restoration of
conformal invariance predicted by the fluctuations of these new scalar degrees
of freedom on the spectrum and statistics of the CMB, in light of the latest
bounds from WMAP. Finally we assess the prospects for a new cosmological model
in which the dark energy adjusts itself dynamically to the cosmological horizon
boundary, and therefore remains naturally of order H^2 at all times without
fine tuning.
