Creating markets, such as emissions trading systems, by defining tradable products and allocating property rights, which allow private actors to engage in achieving efficient outcomes over parameters that previously had impossibly high transaction costs. Climate policy is a case in point. Efforts to reduce GHG emissions are impacted by an unacknowledged struggle about who should possess the use rights over the earth’s atmosphere. While historical use rights were on the side of carbon emitters, current policy prescriptions somewhat breezily assume on the basis of a “polluter pays principle”, whose real-world application is often more difficult than the casual observer might assume, that current use rights belong to the general public. There is nothing fundamentally wrong with this. The problem is only that the hidden distributional issue, which is of considerable magnitude measured in billions of dollars, is defining the strategies of the different actors and blocks any overall progress towards meaningful GHG emissions reductions.