This from Penny Sleuth:

How many times have you read that before? Several, I imagine. But this is not just my headline writer suffering from a crisis of creative confidence. It is, with a slight variation, lifted from the agenda of next week’s AIM conference, to which the London Stock Exchange has graciously offered me a free ticket thus saving me from having to fork out £650 for this one day event. It will be interesting to hear what the presenters at this conference make of the state of AIM today and I will relay this to you at a later date.

It will also be interesting to hear the panel discussion on ‘Cleantech – the next big sector’. Especially, perhaps, on how Cleantech can be prevented from following previous ‘big sectors’ such as dot-com and mining by becoming wildly over-hyped, with the inevitable consequence of a nasty crash.

Anyway in preparation I have been doing a little research into Cleantech. In the November issue of Red Hot Penny Shares – if you’re a member, you’ll receive it this Saturday – I’ve identified three companies quoted on the Stock Exchange that are firmly in this exciting category. As you’ll read, this sector could be a huge opportunity and although it may be a little early to invest just now, these are three shares I’ll be watching closely.

In the issue, I have also found two top quality small companies that are ideally placed to prosper even in the current economic climate. And I explain why the world’s greatest investor says that now is the time to be buying shares. I’m on his wavelength, as I’ll explain.

Leading-edge technologies for a cleaner, brighter future

But let’s get back to Cleantech. It’s defined on Wikipedia as ‘knowledge-based products or services that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy consumption, waste or pollution.’

That could pretty much cover anything really, couldn’t it? The definition provided by investment group 3i gets a little closer to the mark. ‘Cleantech’, it explains, ‘embraces a cluster of leading-edge technologies that are addressing many of the world’s key concerns by making better use of resources and finding cleaner, greener ways to build prosperity.’

Are you getting the gist of it now? Basically, Cleantech is where the wicked world of commerce meets our environmental conscience. It is all about getting richer without destroying the planet. And where an investment theme has a ring of goodness and virtue about it as well as an opportunity for profit, you can be sure that the world’s financiers will have their feet firmly in the trough.

$187bn investment headed for Cleantech

This is indeed the case. $23bn was invested into Cleantech projects in 2000 and if that sounds big, it is nothing compared to the $187bn forecast for 2012.

The credit crunch does not seem to be doing much to stem the enthusiasm. ‘There are clear signs that the Cleantech sector is proving more resilient than others,’ said Michael Liebreich of New Energy Finance. ‘We saw 60% growth in 2007 and the overall expectation for this year is that the numbers will move sideways or slightly up.’ And to illustrate the point, last week saw Intel’s venture capital arm buy a $20m stake in a Chinese solar energy firm.

China, that big dirty villain of the global economy, belching its clouds of black smoke upon us all, is one target for Cleantech. The Chinese government has at least made noises about the state of the environment. It seems prepared to seek help from abroad. But Cleantech is not just about China or clean energy. It includes all sorts of other things as well.

The main themes are agriculture and resource management; biofuels and bioenergy; carbon; energy efficiency; energy storage; fuel cells; low carbon buildings; renewable and alternative energy; transport; waste and water treatment. So all over the world money is being invested into wind farms, carbon capture, fuel cells, electric cars, desalination, recycling, into the capture of methane gas from rotting waste – and much, much more.

The majority of this money is going into private companies, many of which will be floated on stock markets over the coming years. Should investors be excited or wary?

The experience so far – because there are already several Cleantech companies on the stock market – is that we should be wary. It is one thing to come up with a bright idea for getting rich without doing any collateral harm but it can take an awful lot of money and an awfully long time before it becomes a commercial proposition.

A sector to learn about, get to know and understand…

The sector is encouraged by government regulation and supported by public money. It is solving problems such as the shortage of energy and water. It is giving the world what the world wants. It is attracting investment from some of the biggest private equity funds. And yet none of this means that Cleantech is necessarily a good bet for stock exchange investors.

It is right to be wary. If you don’t believe me then listen to the words of Achim Steiner, the head of the UN’s environment program. ‘Just as thousands were drawn to California and the Klondike in the late 1800s, the green energy gold rush is attracting legions of modern day prospectors in all parts of the globe.’

You have been warned. For me, this is a sector to watch carefully for now. It could well be that there will be huge opportunities to profit from Cleantech in the future. Now is the time to learn a bit about it… and to get to know and understand some of the companies involved.

PS. Like the sound of Cleantech? You can invest in the broad sector with the Powershares Cleantech Portfolio ETF (AMEX:PZD).

Source: The Next Big Thing