The carbon price and emissions performance standard are two different types of policies for limiting emissions. The carbon price is market-driven by raising the costs of releasing emissions, whereas the emissions performance standard is more of a regulatory approach where the fuel sources are disincentivized because of how much carbon they release when burned.


The performance standard in En-ROADS is a function of the carbon density of each source of energy. So when the performance standard is set at a carbon density level lower than the carbon density of a fuel source (e.g. coal's carbon intensity is 90 tons CO2/TJ) it is much less attractive to build. The performance standard creates a threshold of attractiveness for investment, beyond which sources with higher emissions intensity (e.g., coal) are greatly diminished in attractiveness and are effectively eliminated from the investment mix.


Performance standards are common. For example, in the US, the efforts of the Obama administration to use the Clean Power Plan to limit coal fired power plants was a type of performance standard (that unfortunately was not enacted). Many US states do have emission performance standards in place, however.