Output-based Emissions Regulations

Electricity generation technologies, including CHP, have traditionally been subject to input-based emissions regulations, which define limits on the amount of emissions that can be produced per unit of fuel input (e.g., pounds of sulfur dioxide per million Btu of coal).

On the other hand, output-based emissions regulations define emissions limits based on the amount of pollution produced per unit of useful output (e.g., pounds of sulfur dioxide per megawatt-hour of electricity). A major benefit of output-based emissions standards is that they encourage cost-effective, long-term pollution prevention through process efficiency. Efficient distributed production of electricity from fossil fuels reduces fuel inputs compared to conventional generation and transmission systems, and leads to fewer emissions of all pollutants, not just those limited by regulation. Output-based emissions standards thus recognize both the efficiency and pollution prevention benefits of CHP and other distributed generation systems, which is not the case with input-based standards.

Output-based emissions standards also aid regulators in comparing the emissions performance of different technologies through the use of common units for their emissions (lb/MWh) rather than the more varied units used in input-based standards (ppm, lb/MMBtu, etc.).  Use of common units is particularly relevant to CHP, which combines both thermal energy and electricity production – which are traditionally measured in different units – into one integrated system.

While the inclusion of an output-based emissions standard alone constitutes a great step forward for states in encouraging CHP, an important best practice is to use an avoided emission approach. In 2003, as the result of an extensive stakeholder process, the Regulatory Assistance Project (RAP) released a national model emission rule for distributed generation systems.  Increasing interest in output-based emissions regulations justified the formation of a national rule because, as we saw in our discussion of interconnection rules, a hodgepodge of inconsistent state rules for output-based emissions creates barriers for CHP and other DG developers.