Earlier this month, the Senate began considering The American Clean Energy and Security Act of 2009. The act seeks to drastically reduce carbon emissions of American corporations. One of its main provisions creates a cap-and-trade system for carbon emissions.
In the proposed cap and trade system, the government will issue carbon credits which allow corporations to emit a certain amount of carbon. The federal government will give away 85% of the carbon credits before auctioning the remaining 15% of credits. Companies will then buy or sell carbon credits as needed.
The bill will essentially create a new commodity – carbon emissions. Corporations and speculators will buy, sell, and trade the carbon credits at a commodities exchange.
Critics of the bill claim the cap-and-trade system will lead to higher energy costs.
Heritage Foundation scholar Ben Lieberman told the Senate Republican Conference that, if enacted, the bill increase a household of four’s energy costs by $436 a year—by 2035 the increase will reach $1,241 a year. Over that time, the cumulative higher energy costs for a household of four will total nearly $20,000.
While middle class Americans stand to lose thousands of dollars a year from the Democratic energy overhaul proposal, investment banking giant Goldman Sachs stands to make millions.
A 2007 press release of the company Climate Exchange PLC shows that Goldman Sachs holds an 11.75% share in the company. In turn, Climate Exchange PLC owns the Chicago Climate Exchange, the exchange where corporations will buy, sell, and trade the government’s carbon credits. Like all commodity exchanges, the Chicago Climate Exchange charges a commission on all trades made on the exchange. Once the cap-and-trade bill passes, the Chicago Climate Exchange—and Goldman Sachs—will make millions, possibly more, from commissions on carbon trading.
That Goldman Sachs stands to profit from Democratic legislation should come as no surprise. According to the Center for Responsive Politics, the Goldman Sachs PAC donated nearly $1 million to Obama’s presidential campaign while giving just over $200,000 to McCain. Furthermore, Goldman Sachs employees gave $687,605 to the Obama campaign and just $202,770 to the McCain campaign.
According to a company memo, Goldman Sachs requires employees to submit all political donations for review in order for Goldman Sachs to determine “if they are consistent with our [Goldman Sachs’] policies.”
The latest move challenges the assumption that Republicans are the big winners when Wall Street money gets doled out.
Other Democratic activists stand to profit from the legislation as well.
Generation Investment Management (GIM), an environmental investment firm founded by Al Gore, stands to make millions. The Competitive Enterprise Institute, a libertarian think tank, stated in a press release, “What we discover in looking at the policies that Mr. Gore advocated… is that they will make him and his friends extremely wealthy at the expense of consumers, who will be stuck with skyrocketing energy prices.”
Furthermore, GIM won’t allow lower and middle income Americans the opportunity to benefit from the legislation. According to a GIM press release, only “institutional investors” and “select high net worth individuals” can invest with GIM.
In the end, it seems middle and lower income Americans will foot the bill for wealthy Democratic donors to profit from cap-and-trade legislation.
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