Emissions trading is much admired, but it raises difficult issues of equity for which there are no obvious answers. Everyone recognizes that emissions trading would reduce the cost of meeting the greenhouse gas emission limits in the Kyoto Protocol, but little attention is given to the domestic pre-conditions for robust emissions trading. One of the most important of these pre-conditions is an agreeable allocation of the newly limited (and thus, valuable) rights to emit greenhouse gases. This Policy Note reviews what is involved in taking this first step toward emissions trading.