This one sentence from a US Congressional Budget Office report on the economics of a carbon cap says an awful lot:

[O]ne study suggested that if emissions were reduced by 23 percent and all of the allowances were distributed for free to producers in the oil, natural gas, and coal sectors, stock values would double for oil and gas producers and increase more than sevenfold for coal producers, compared with projected values in the absence of a cap.

Yee-haw!! It looks to me as if grandfathering to coal companies would be fantastic!!! That is, if you’re a shareholder. For everyone else, not so much.

The economics behind all this are a little hard to explain—I’ve tried, but without much success. But suffice it to say, the author of this paper—Stanford economics professor Lawrence Goulder—is a super-reputable dude. So if you’re not inclined to take my word that grandfathering = massive windfall profits, you should at least listen to him. (And if you’re curious, the original paper is here.)