I'm new to video editing and was wondering if this is possible?
Is there a way to only apply video effects or edit only a portion of each frame? For instance, I would like to change a whole clip to black and white except a character's red shirt.
Premiere isn't really set up for this, but the way to do it is block out portions of a frame using a Garbage Matte in Premiere Pro. Put two instances of the same video on top of each other and apply a garbage matte to the top layer. Go to the effect menu, select the garbage matte effect and you'll see several anchor points in the preview window (4, 8 or 16 depending on the effect). What you have to do is keyframe these anchor points so that they conform to the area that you want to apply your effect on.
Then just apply whatever effect you want to the top or bottom layer.
The hard thing is, Premiere limits you to 16 anchor points per effect, meaning that complex shapes and round edges are very difficult to achieve and you can't feather (make the edges of the mask go out of focus) to smooth the sharp edges. It's just so much easier to do it in a program like After Effect.
It's called color pass, but results vary depending on how many shades of similar colors are present in the scene, and even then some masking is involved.