The potential price tag for governments around the world to start tackling the immense problem of climate change is in the trillions. The United Nations estimates that climate change will cost the world $300 billion a year. This cost is both a burden and an opportunity.

From the International Herald Tribune:

In energy infrastructure alone, the transformational ambitions that delegates to the United Nations climate change conference are expected to set in the coming days will cost more than $10 trillion in additional investment from 2010 to 2030, according to a new estimate from the International Energy Agency.

Not everyone can afford to pay for climate change, though. And that's why some countries want to start a Green Fund. This proposed Green Fund would raise billions of dollars over the next 10 years.

The four countries proposing the fund are Britain, Australia, Mexico and Norway, and they expect to reveal their initiative at the conference.

That's why I've started looking at companies that might get swept up in the investment wave that could follow any deal the Climate Change Conference reaches in the next week.

First, a tie-in to this "Green Fund."

According to Reuters, Norway has suggested that the fund could raise money by auctioning off carbon emission allowances, or carbon credits.

Should some sort of global scheme be set up to cap carbon emissions, countries with more efficient energy generation, or renewable energy sources, might gain carbon credits. Take Denmark, for example. It generates about one-fifth of its energy needs from wind power, or about 73.8 MW per square kilometer, according to the European Wind Energy Association.

Denmark might be able to achieve a carbon credit for its use of wind power as opposed to fossil fuel-based technologies.

Translate this over into the corporate world, and utilities with more renewable or efficient energy technologies will certainly benefit from any cap-and-trade program.

That's an added benefit to Centrais Eletricas Brasileiras (EBR:NYSE), the biggest electric company in Latin America. EBR manages a government incentive program that seeks to diversify through alternative sources of electric power.

One of the company's programs brings electricity to rural communities using renewable energy. According to the Ministry of Mines and Energy, the Technology Cooperation program has enabled 120,000 homes in the Amazon to have photovoltaic systems (solar energy systems) and almost 3,000 mini networks that provide renewable-energy-generated electricity to more than 330,000 homes.

I like these international utilities with renewable energy and energy-efficient technologies.

Other possible investment ideas for these utilities are Veolia Environment (VE:NYSE), which provides energy savings and efficiency technology, and FPL Group (FPL:NYSE), which just announced it would be spending $2 billion on wind energy in 2010. FPL is already the largest wind energy company in the U.S. and is the No. 1 operator of solar power generation.

Another sector of investment within this industry will be renewable energy companies themselves. And here's where things get complicated quickly. There are so many alternative energy companies out there, it's hard to know which will steam ahead in 2010.

You could skip the whole company comparison, and even the whole energy technology comparison (solar vs. wind), and go with a renewable energy ETF.

PowerShares has a number of ETFs in this category, like the well-known WilderHill Clean Energy ETF (PBW:NYSE), and the WilderHill Progressive Energy ETF (PUW:NYSE), of which energy efficiency and cleaner traditional technologies makes up the holdings.

Or you can take a look at the Global Clean Energy Portfolio (PBD:NYSE) or the Cleantech Portfolio (PZD:NYSE) for a more "worldly" investment angle.

There is some crossover between these funds of course, so make sure you look at the fund holdings and sector allocations before you decide exactly what you want.

If you're looking for something more specific, sector-wise, PowerShares has a Global Wind Energy Portfolio (PWND:NASDAQ).

Now, just because all of these ETFs are from PowerShares, doesn't mean I'm backing PowerShares. There are a number of other renewable energy ETFs available for investors…

But I wanted to highlight just how popular and global renewable energy investment has become.
And this is just the tip of the iceberg…

The Climate Change Conference ended on Dec. 18th with a last minute deal (and very last minute with China already at the airport set to leave!). The deal doesn't hold the representatives to their predictions for saving carbon emissions, but it does require some reporting of the progress toward those predictions.

And between this deal, governments pushing for clean energy options and public sentiment, I’d say renewable energy companies and energy-efficiency technologies will be a major investment trend for 2010.

Other Related Topics: Exchange-Traded Funds , Renewable Energy , Sara Nunnally , Taipan Insider

Other Articles Related To This Topic:

Comments (2)