Output-Based Regulations

State Policy Resources

Output-Based Regulation and State Implementation Plan Resources

The Output-Based Environmental Regulations Fact Sheet describes how these regulations encourage CHP projects and which states already implemented them. Download a PDF version (4 pp, 189K, About PDF) to print and share.
Output-Based Regulations: A Handbook for Air Regulators (PDF) (86 pp, 524K, About PDF) outlines what the regulations are, why states should adopt them, and offers suggestions on how to adopt output-based emission standards.
State Implementation Plan (SIP) Guidance for Energy Efficiency and Renewable Energy Measures (PDF) (39 pp, 829K, About PDF) describes how states can improve their air quality through the development of clean energy measures in SIPs.
EPA Clean Energy-Environment Guide to Action, Section 5.3 (PDF) (11 pp, 497K, About PDF) outlines different methods for implementing output-based regulations under a variety of larger clean energy policies, such as cap-and-trade and multi-pollutant emission regulations.

Note: Many links on this page go to non-EPA Web sites. Please read the EPA Disclaimer.

Output-based regulations (OBR) encourage efficiency and renewable energy as air pollution control measures. OBR levels the playing field by establishing performance criteria and allowing efficiency and renewable energy to compete on equal footing with other methods of reducing emissions, such as combustion controls and add-on controls.

Traditionally, boilers and power generators have been regulated on an input basis. That is, emission limits have been established on a unit of pollutant emitted per unit of fuel input basis (e.g., pounds per million British thermal units [lb/MMBtu]). This approach relies on the application of pollution control devices to reduce emissions and does not explicitly recognize the efficiency of the process in converting fuel input into a useful output.

Significant opportunities exist to reduce pollution upstream in the energy generation process by encouraging efficiency improvements through CHP. Establishing emission limits on an output basis—units of pollutant per unit of useful output (e.g., pounds per megawatt-hour [lb/MWh])—recognizes efficiency improvements as pollution prevention.

Benefits of Output-Based Approaches

There are a number of benefits that output-based regulations can provide, such as:

Fuel Savings: Output-based emission approaches encourage energy efficiency improvements through the use of new technologies, renewable fuels, opportunity fuels, and energy recovery through CHP, resulting in reduced fuel consumption.
Emission Reductions: Because output-based emission regulations promote increased fuel conversion efficiency and a corresponding reduction in fuel consumption, they promote pollution prevention and reduced emissions. Output-based emission approaches also promote multi-pollutant reductions.
Transparency: Output-based approaches provide a clear measure of the emissions impacts of producing an energy product, such as electricity or steam. Because output-based emissions take into account the output and efficiency of the process, they facilitate "apples to apples" comparisons of the emissions impacts of different facilities.

Comparing different energy generation facilities is more straightforward when regulated on an output-basis, as demonstrated below. The input-based emission limits stated on the left provide a limited indication of the actual emissions impacts of the plants, while the limits on the right directly correlate to the actual emissions impacts of the plants.

Emissions Benefits of Output-Based Regulation

This graphic compares the emission reduction benefits of output-based regulation, which recognizes efficiency as a pollution control strategy. The graphic shows two 300-megawatt power plants: plant 1 is 34 percent efficient and emits 945 toms of pollution per year; plant 2 is 53 percent efficient and emits 787 tons of pollution per year.

Many states are currently using OBR in emission standards as well as output-based allocations of emission allowances within a cap-and-trade program.

State Examples

Connecticut OBR (PDF) (15 pp, 138K, About PDF) - Connecticut has promulgated an OBR for nitrogen oxides (NO_x), particulate matter, carbon monoxide, and carbon dioxide (CO₂) from small distributed generators (less than 15 megawatts [MW] capacity), including CHP. The regulation values the efficiency of CHP based on the emissions that are avoided by not having separate electric and thermal generation.
Indiana OBR - Indiana has created a set-aside of allowance allocations for energy efficiency and renewable energy in its NO_x trading program. Indiana allocates 1,103 tons of NO_x allowances each year for projects that reduce the consumption of electricity or energy other than electricity, or generate electricity using renewable energy. For further information, visit the Indiana Department of Environmental Management's NO_x trading program Web site.
Massachusetts OBR (PDF) (28 pp, 259K, About PDF) - Massachusetts has used OBR in several important regulations. The Massachusetts NO_x cap-and-trade program employs useful output, including the thermal output of CHP, to allocate emission allowances to affected sources (generators greater than 25 MW). This approach provides a significant economic incentive for CHP within the emissions cap. Massachusetts also has a multi-pollutant emission regulation (DOC) (8 pp, 53K, About DOC) (NO_x, sulfur dioxide, mercury, CO₂) for existing power plants, which uses an output-based format for conventional emission limits.

If you would like assistance on these or other energy efficiency and renewable energy measures for state implementation plans, please contact Katrina Pielli (pielli.katrina@epa.gov).

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