This is a rush transcript from "Hannity," August 27, 2010. This copy may not be in its final form and may be updated.
SEAN HANNITY, HOST: Welcome back to the Green Swindle, now President Obama's answer to the so-called problem of global warming is one of the most controversial solutions being shopped today.
PRESIDENT BARACK OBAMA: Every little bit of pollution that is sent up into the atmosphere that polluter is getting charged for.
HANNITY (voice-over): It the system known as cap-and-trade, but what does it actually mean?
ROY SPENCER, PH.D., CLIMATOLOGIST: The government caps how much CO2 companies and industries can produce and allows them to trade credits in CO2.
STEVEN HAYWARD, AMERICAN ENTERPRISE INSTITUTE: So if one firm faces very high cost to reduce pollution and another firm has low cost to reduce pollution. The idea is the low cost firm can create credits and sell them to the other company.
The idea of cap-and-trade is that you leave it to marketplace to determine what measures should be used to reduce pollution. It's really a misnomer to say that cap-and-trade is a market-based system.
At best, you might call it market socialism because essentially you are rationing energy use.
HANNITY: Where did this idea of carbon trading come from? Like many things related to the current administration, it could be traced back to Obama's hometown and a company called the Chicago Climate Exchange or the CCX.
The company declined an interview request, but in an e-mail to Fox News, a spokesperson explains that CCX's purpose is to, quote, "help prepare businesses and markets for potential regulations at the international or federal level," while "reducing greenhouse gas emissions through a rules-based exchange platform." The founder of CCX is Richard Sandor named by Time magazine as the father of carbon trading.
HAYWARD: He was one of the leaders in saying why don't we get out early and start a climate exchange for greenhouse gases. So he went and got foundation grants from liberal foundations like the Joyce Foundation at the time one of whose board members was a guy named Barack Obama.
HANNITY: The company originated with two grants from the Chicago-based Joyce Foundation whose president Paula DiPerna soon left to become the executive vice president of CCX. Senior White House adviser, Valerie Jarrett was the foundation's former director.
HAYWARD: Usually you don't need foundation funding to setup a commodity exchange, there's usually plenty of private money because there is usually lots of profit in trading commodities. Well carbon is different because we are going to make that market artificially.
HANNITY: In 2006, CCX was acquired by climate exchange PLC, which was then acquired in July of this year by Intercontinental Exchange for approximately $600 million.
Among those who may have benefited financially? Sandor himself who owned nearly 17 percent of shares, Al Gore's company, Generation Investment Management and Goldman Sachs, which at one point owned as much as 10 percent.
HAYWARD: There's a lot of green to be made in being green.
HANNITY: Now despite CCX's arguments in favor of a cap-and-trade system, many scientists and economists maintain not only is a bad idea, it is also nearly impossible to implement.
Climatologists and former NASA scientist Dr. Roy Spencer says that the energy technology necessary to make a large scale switch from fossil fuels does not yet exist.
SPENCER: You cannot legislate new forms of energy into existence.
HANNITY: Dr. Spencer also argues that the climate system is much less sensitive to CO2 than most experts claim and that CO2 in the atmosphere might not even be a bad thing.
SPENCER: Cap-and-trade might make people feel good about themselves that we're actually doing something to help the environment. But it is not going to have measurable impact on future global temperatures.
HANNITY: Others argue against cap-and-trade's practicality. If President Obama wants us --
OBAMA: To reduce emissions to their 1990 levels by 2012 and reduce them an additional 80 percent by 2015.
HAYWARD: What does that actually mean in practical terms? It means reducing our fossil fuel energy use to a level the United States last experienced 100 years ago.
HANNITY: Most of all, critics argued what the system would mean for an already struggling economy.
SPENCER: Cap-and-trade is a mechanism for punishing use of fossil fuel so that other sources of energy, which are inherently more expensive will become more attractive.
HANNITY: The Washington Times stated in 2009, that Obama's climate plan could cost industry close to $2 trillion. That's nearly three times the White House's initial estimate.
HAYWARD: Where do the energy companies get their money? They get it from rate payers. They get it from people who buy gasoline, natural gas and electricity. So eventually the consumer pays 100 percent of the tab.
OBAMA: Under my plan of the cap-and-trade system, electricity rates would necessarily skyrocket.
CONGRESSMAN JIM SENSENBRENNER, R-WISC.: Once people saw it was a huge tax increase folded into their energy bills then people saw the economic impact not only on their pocketbook, but also on American jobs and American competitiveness around the world.
SPENCER: The greatest amount of experience that anyone has with cap-and-trade is in the European trading scheme and they've been doubling in this for a couple of years now.
HAYWARD: You've had a number of companies in Europe that have shutdown factories or moved out of Europe completely into developing nations that aren't suppressing their carbon dioxide emissions.
HANNITY: It's somehow cap-and-trade keeps inching closer to becoming reality. The Waxman-Markey Bill, which would establish a cap-and-trade system here in the U.S. similar to the E.U.'s emission trading system narrowly passed the House last year by a vote of 219-212.
UNIDENTIFIED MALE: What do you say to the 212 that voted against it?
JONATHAN ADLER, LAW PROFESSOR CASE WESTERN RESERVE UNIVERSITY: The Waxman-Markey Bill was this 1,000 page monstrosity of all sorts of deals and special arrangements for all kinds of interest groups that will create a lot of regulation, create a lot of work for lawyers, create a lot of work for lobbyists. It won't do much to make us a wealthier or greener society.
HANNITY: The bill is currently sitting in the Senate.
OBAMA: I look forward to continue this work with the Senate so that Congress can send me a bill that I can sign into law.
SPENCER: Politicians are more interested in gaining power than they are in improving our economy. Either that or they are just plain stupid. They really don't care whether the science is right or wrong. All they care about is that this is an opportunity to expand government. And since all of humanity requires energy, this kind legislation is a bureaucrat's dream because whoever controls energy, controls the world.
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