The objective of a carbon dioxide (CO2) performance standard is to reduce power plant emissions by directly or indirectly requiring designated sources to employ technology or other measures to limit CO2. Designated sources might include only new plants, only existing plants, or both. Various criteria can be used as the basis for a performance standard. For example, the standard might require individual coal-fired generators to use the "best available control technology" (BACT), or operate at the "lowest achievable emission rate" (LAER). Performance standards that limit CO2 emissions could apply to individual units, to a collection of generators, or to entities that sell (rather than generate) electric power. For example, generator performance standards place the burden on electric generators (requiring them to demonstrate compliance during permitting or monitoring processes) while retailer obligations place the burden on electric retailers (preventing them from obtaining electricity from non-complying generators).
An alternative to this regulatory approach is cap and trade. Several Northeastern and Mid-Atlantic states are currently participating in a regional cap-and-trade program that limits CO2 emissions from the electricity sector (cap and trade systems covering multiple economic sectors are also under development in the West and Midwest). Cap and trade ensures that total emissions from all covered entities fall below a cap that typically declines over time; it does not mandate limits for individual entities, as is the case for performance standards.
For more information:
Cap and Trade 101 [1]
Coal Initiative Series: A Performance Standards Approach to Reducing CO2 Emissions from Electric Power Plants [2]
Coal Initiative Series: State Policy Options to Advance CCS [3]
Updated: September 9th, 2009