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Over the past five years, the focus on environmental awareness has created both social and political headlines.  Only in the past two years has this recognition of environmental awareness begun to capture economic headlines in the media. There has been increased focus on the importance of renewable energy sources and alternative energy technologies.  Those involved in this industry refer to them as "clean technologies" or "clean-tech." Renewable resources today only produce 2 percent of the world's energy and account for about 18 percent of the world's investment in power generation, but that is sure to rise substantially during the next decade.

Clean technologies are commonly divided into four main sectors: energy, transportation, water and materials.  Clean technologies can range from solar and wind power to hybrid vehicles to water filtration systems. Clean technologies aim to do one of three things:

The potential success and benefits of these technologies, coupled with the growing concerns over global warming, pollution, dwindling natural resources and soaring energy costs make for what former President Bill Clinton has referred to as "the greatest economic opportunity facing the United States since the military buildup to World War II."

With 98 percent of the world's energy produced from nonrenewable sources, one can imagine the growth potential for clean technologies and the investment opportunities available.  There is a huge potential for large profits for investors who get into the clean-tech arena early, and in fact investing in clean-tech has just recently gained momentum.  Major corporations have already committed millions of dollars to clean technologies.  In 2005, GE launched an  "ecomagination initiative" that sought to reduce greenhouse gas emissions by 1 percent and improve energy efficiency by 30 percent.  As part of this initiative, GE also committed to double research and development investments in clean technologies from $700 million in 2005 to $1.5 billion by 2010.  Investment banking giant Goldman Sachs has invested $1.5 billion since 2005 in cellulosic ethanol, solar and wind power.  Goldman has begun to include environmental issues and concerns as a key metric in investment decisions. 

Internet visionaries Bill Gates and John Doerr, among others, have also bought into the idea of alternative fuels and environmentally friendly products.  In November 2005, Gates committed $84 million to a California company to finance the construction of five ethanol biorefineries. In 2005, AOL Founder Steve Case launched Revolution LLC, which invests in companies such as car-sharing service Flexcar that promote sustainable lifestyles.  Case committed $500 million of his own money because as he has stated, "the green, sustainability movement is going mainstream and we want to ride that wave."  In March 2006, Doerr, the venture capitalist who invested early in Google and Amazon, set up a $100 million fund to invest in "clean technologies."  Doerr has said, "Clean-tech could be the largest economic opportunity of the 21st century."

Venture capitalists like John Doerr are what many industry insiders believe will allow clean technologies to reach their full economic potential.  Venture capital and private equity firms invested $2.9 billion worldwide in clean technologies in 2006, a 78 percent increase from the $1.9 billion invested in 2005.  The increase in investment activity is apparent quarter to quarter as well.  In North America, $1.2 billion of equity capital was invested during the third quarter 2007, a 43 percent increase from the $842 million invested during the second quarter of 2007.

These amounts are expected to increase dramatically over the next five years.  The greater interest in investment opportunities among professional investors can be attributed to the increased valuations of these clean-tech companies.  For example, in the U.S., median valuations for clean-tech companies reached $30 million in the first half of 2007, compared to $15.8 million in 2001. Nearly all clean technology segments have seen major leaps in median valuations in the last year.  Entrepreneurs rely on professional investors to fund their research and development, in order to make these clean dreams a reality.