In 1964, Lyndon B. Johnson proposed legislation which became known as “The War on Poverty.” Five years later, Richard Nixon, introduced “The War on Drugs.”And what do we have to show for these brilliant government initiatives, 40 years later? Not much, besides massive expansion of the welfare state and the costly incarceration of millions of people for victimless crimes. These two “wars” have done nothing to reduce poverty or curb the abuse of drugs.

But their effects are minor compared to the next “war” which our government is set to engage. And this is one in which you will be enlisted, whether you like it or not. I’m talking about the “War on Climate Change.”

I predict this new “war” will have the same effect as those that have preceded it. It will serve to enrich government coffers and expand its power, while failing to have any effect on the climate whatsoever.

And while this initiative is likely to drive the final nail in the coffin of the U.S. economy and run certain industries into the ground, it will provide significant benefits to certain companies. In this article, I will share with you two companies that stand to profit.

I am not going to debate whether the planet is actually warming or if it is the result of human activity. I don’t have those answers. But I do know that the issue is not nearly the open-and-shut-case its proponents would like for you to believe.

One of those proponents, President Obama, recently stated, “The science is beyond dispute and the facts are clear.” To which more than noted 100 scientists, representing institutions such as Los Alamos National Laboratory, the American Physical Society, the Intergovernmental Panel on Climate Change, Princeton and MIT, signed a newspaper advertisement which read, “With all due respect, Mr. President, that is not true. […] The case for alarm regarding climate change is grossly overstated.”

Another petition disputing the claims on which global warming policy is based has been signed by more than 30,000 scientists. So make up your own mind, but don’t buy the propaganda from either side that the issue has been decided.

But what will affect you far more than the nebulous potential for rising seas are the government’s plans to fight “The War on Climate Change.” So, what are those likely effects and how can you profit?

The climate change legislation is couched in a bill called The American Clean Energy and Security Act of 2009. This legislation was passed by the House last week, and will be voted on by the Senate later this year. You may have heard it referred to as “Cap and Trade”. Here’s how it works.

This legislation would set a limit on the emissions of CO2 (and other “greenhouse gasses”) from sources like power plants, factories and refineries. These upper limits would gradually decrease over time. That is the “cap”.

Companies would be allocated allowances to emit these gases. Those that reduce their emissions below their allocation could then sell their excess allowances to companies with emissions that are above their allowances. This is the “trade”.

The objective is to raise the costs for industries that use fossil fuels and artificially level the playing field for clean and renewable sources of energy. Because these alternative energy sources are currently more costly and far less efficient, they would otherwise not be able to compete with fossil fuels.

The result will be a de facto tax on just about everything you buy. If you turn a light switch, put gas in your car, travel by air, buy food, or purchase just about any product that is manufactured and transported, this bill will affect you.

A few days ago, Democrats in favor issued a statement that this bill is a “comprehensive approach to America’s energy policy that will create millions of new clean energy jobs, save consumers hundreds of billions of dollars in energy costs, enhance America’s energy independence, and cut global warming pollution.”

Talk about doublespeak. If this bill passes, I predict the results will be the exact opposite.

While politicians would like to claim that they are taxing the “polluters”, the real burden will undoubtedly fall on the end user. Instead of shouldering these regulations and increased costs in the U.S., many businesses will simply avoid the burden by moving to another country. Entire industries and millions of jobs will be lost.

Those companies that do not move overseas will simply pass on their costs to the consumer. Those that can’t will be forced to make production cuts and reduce labor. This will result in further increases in unemployment and reduced economic growth.

While this legislation appears to be a tax on energy, it is ultimately a backdoor tax on income. As income rises, so does the use of energy and energy-intensive goods and services. Those with the greatest income will pay the most.

But as a percentage of income, the greatest burden will fall on low- and middle-income working families. These households spend a much greater proportion of their income on gas to drive to work, groceries and energy to heat and cool their homes.

The conservative Heritage Foundation estimates that the combined cost of this bill will be $3,000 per family in 2012. The Congressional Budget Office estimates a smaller increase of $1,600 a year. But even at that rate, it would represent a 50% increase in the effective income tax of a typical family earning $50,000 a year and paying $3,000 in income tax currently.

As consumers are forced to cut back on spending, there will be fewer new jobs created and even higher unemployment. In fact, the legislators are so aware of the effect this will have on jobs, they have included a provision in the bill to allow for extended unemployment benefits!

So forget any promises about this legislation boosting the economy, increasing our energy independence or creating jobs. It will actually do just the opposite. Given the precarious state of our economy, this is the last thing we need.

It is highly unlikely that the Chinese, Indian and other emerging economies will put the brakes on their own economic growth by placing a tax on energy. And if they don’t it is likely to result in an economic disaster for the United States, as we will not be able to compete. Not to mention that any reductions in greenhouse gases in the U.S. would be offset by increases in other countries, detracting from any potential benefit to the climate.

If this bill passes, you’re going to be paying more for just about everything and economic growth in the U.S. will potentially be crippled. So, how can you benefit?

The big winners from “Cap & Trade” will be renewable sources of energy. Wind and solar are far costlier and less efficient than fossil fuels, but they will benefit from the artificially-leveled playing field. However, these two areas have already received a great deal of attention from investors. I believe there is a greater opportunity in another source of green energy – geothermal power.

Geothermal energy is generated by capturing the heat stored within the earth and turning it into steam which drives power-generating turbines. Geothermal power releases no carbon emissions, it requires no ongoing purchase of fuel and it is a sustainable source of energy that is naturally replenished.

In my opinion the two best plays in this sector are Ormat Technologies (ORA) and Calpine (CPN).

Based in Nevada, Ormat is the largest operator in the geothermal industry. The company designs, develops, builds, owns, and operates geothermal and recovered energy-based power plants. Currently the company is operating 7 facilities in Nevada alone, which are well positioned to serve western markets. I see Ormat as an exceptional long-term play on the growth of geothermal power.

However, Ormat is not a pure play on “Cap and Trade” as the company operates facilities in a number of countries outside the U.S.

A more direct play on “Cap & Trade” legislation is Calpine, based in California. Calpine is the leading producer of geothermal power in the United States, with all of their plants in located in California. But Calpine also operates state of the art natural gas-fired plants in nearly 20 states, including numerous facilities in the South, Southeast and Northeast. Currently these plants compete primarily with coal-fired plants. Coal is a cheaper source of energy than natural gas, but it is also much dirtier. The new legislation would place a very heavy burden on coal, and would likely cause natural gas to become a cheaper source of fuel.

This would be a huge boon to Calpine and a very profitable development for the company’s shareholders.

Besides raising your voice in protest or firing off a few letters, there is very little you can do personally to effect this legislation. But there are some things you can do to profit in case it is adopted. I suggest you invest in companies that produce and enable geothermal energy and which can provide alternatives to coal-fired power. Ormat and Calpine both fit the bill.