Here’s the scenario:

• You have a document library which stores SSRS reports
• You want to have users create subscriptions to the reports
• When they try, ‘Email’ is not in the list of Delivery Extensions

This means that you must set up your SSRS installation for email delivery.

To find out how to accomplish this, Microsoft has an excellent page to show you how:
http://msdn.microsoft.com/en-us/library/ms159155.aspx