Green investments may pay off

February 05, 2008 11:00 pm

By Kelley Atherton

Triplicate staff writer

Green is the new black.

Eco-investments have been sweeping the stock market. While the overall economy has seemed near collapse, the "eco-economy" has remained steady thanks to all the billion-dollar companies that are investing in green technology.

Environmentalists hem and haw about "green-washing," but look at all the money it's putting money into the economy.

An analysis by Grist, an online environmental news magazine, states that in 2007 venture capital funds plunked down $2.6 billion in alternative energy and clean-technology firms.

General Electric announced last month it will invest $6 billion in renewable technology by 2010. The German company Schott Solar is spending $100 million on a plant in New Mexico to make equipment for solar power plants and Morgan Stanley has invested $190 million in clean-technology.

Awareness about global warming and being green has been gaining popularity. So much so some presidential candidates have focused on climate change rather than fixing the economy. Maybe the two are one in the same.

Eric Janszen, the president of the market watchdog Web site, predicts that the next financial bubble will be alternative energy technology. Previous bubbles that have blown up and then burst include the housing market and dot-com companies.

In Harper's Magazine, Janszen describes a financial bubble as a "market aberration manufactured by government, finance, and industry." These bubbles create an aura of good times for the economy. It's a direction for investors to follow, but when stocks become overinflated, the bubble explodes.

He projects that the alternative energy bubble could grow to $20 trillion, leaving the dot-com and housing bubbles in its wake. However, the downside is that this bubble could only lead to an increase in stock prices and not energy sustainability.

What's different about alternative energy is that it's new territory like the Internet was in the '90s. In a question and answer session with Grist, Janszen explained that investors are looking to alternative energy right now due to energy insecurity, rising oil prices and a weak dollar.

These same factors could also prevent the bubble from expanding. If another financial boom pulls the country out of recession, oil suddenly becomes cheaper or the Middle East is stabilized—these could all slow down the alternative energy boom.

Green technology may or may not be the boom that prevents a recession, but the industry is growing and lots of companies are buying into the idea of sustainability. The good news for California is that a large chunk of those investments are pouring into the Golden State.

As the old adage goes: don't put all your eggs in one basket. However, investing in the sustainability of the planet is an important egg.

What's in a name?

•Green technology: Technology that helps to preserve the environment and natural resources while slowing the negative impacts of human influence

•Alternative energy: Energy from sources other than fossil fuels such as oil and coal

•Renewable energy sources: Energy from natural resources such as wind, flowing water, solar energy and biomass

•Clean-technology: Optimizing the use of natural resources while generating less pollution

•Energy efficiency: Using less energy to provide the same level of service

Reach Kelley Atherton at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it