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 "Emissions performance standard" slider in the Carbon Price advanced settings models a performance standard based on the carbon intensity of electric generation (tons of CO2 emitted per terajoule (TJ) of energy generated). Electricity sources above the standard are disincentivized—the more a fuel exceeds the standard, the fewer electric power plants of that type will be built. Energy sources have different carbon intensities, with coal emitting the most carbon dioxide per unit of energy (approximately 90 tons CO2 per TJ energy), followed by oil (66 tons CO2 /TJ), and then natural gas (51 tons CO2/TJ). 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 emissions performance standards in place, however.