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The key part of a cap and trade system is the initial allocation of permits, which is commonly done through grant parenting. In grant parenting, the government creates permits and gives them for free to greenhouse gas emitters based on their past emissions. This method, also known as grandfathering, is politically easy and helps maintain the status quo by not upsetting the current system. This process aims to make the transition to needing permits for emitting greenhouse gases smoother, as it may face lobbying opposition.
