Lately some of my investment returns look like they've spent the last several months sleeping in the stairwell of a Holiday Inn, and my friends, that's low.

Some more lowliness
Nine years ago, if you had invested evenly across three exchange-traded funds that track the Dow Jones Industrial Average, the Nasdaq, and the S&P 500, your investment would be lower by nearly a third. It would take you four straight years of 10% effective annual returns just to break even.

800,000-year high!
On the other hand, mull over this: scientific evidence suggests that today's atmospheric CO2 levels have reached an 800,000-year high. Couple that statistic with a few other observations, and let Mosaic theory work its magic.

  • Global economies are in shambles.
  • Credit markets are shells of their former selves.
  • Policymakers associate environmental clean-up efforts with job-creation and an opportunity for economic prosperity.

See the dollar signs?
At a critical time, the causes for increasing energy efficiency and developing green industries have gained support from some of the world's most influential leaders. It will mean big money if policymakers collectively embrace a "low-carbon Industrial Revolution."

Already under way, the shift toward renewable energy has brought about a movement to retrofit inefficient equipment, a revival of nuclear power, rapid growth in wind-power development, and advancements in solar technology.

With that said, let's take a look at a few companies in the clean energy space that are well positioned to benefit from a potential regulatory backstop:

Rebuilding the Grid
Allegheny Technologies' (NYSE:ATI) produces a steel alloy called grain-oriented electrical steel (GOES), which conducts electricity and has magnetic properties. GOES goes into transformers of all sizes, and Allegheny calls it the essence of electrical grid efficiency.

Nuclear
Constellation Energy (NYSE:CEG) prides itself on being safe, clean, and reliable. It provides energy consulting services in addition to developing, owning and operating a fleet of nuclear power generating facilities.

Hitachi Limited (NYSE:HIT) generates a healthy portion of its revenues through manufacturing power plants and control equipment. As of last year, it has agreed to a strategic alliance with General Electric (NYSE:GE) for future nuclear power joint ventures.

Wind
General Electric has had some recent success selling its wind equipment, and it is capable of claiming a healthy portion of the market share. With its electrical engineering prowess and deep pockets, a number of its businesses should also benefit from clean energy spending.

Magnetek (NYSE:MAG) designs and builds digital power control systems for renewable energy sources. It expects to complete a large order of wind inverters next quarter, which should give it a double-digit revenue increase over last year's same period sales.

Solar
SunPower, (NASDAQ:SPWRA) which was recently spun-off from Cypress Semiconductor, provides solar power products such as solar cells, solar panels, and inverters. In 2007, SunPower accounted for nearly half of Cypress' sales – or around $800 million. SunPower's management expects its 2009 revenues to top $2 billion.

SunTech Power (NYSE:STP) also competes in the solar equipment value chain through its solar cell manufacturing. Over the past few years, it has experienced remarkable sales growth, and it has particularly benefited from increased solar spending in China.

Caterpillar operates in several segments that contribute to major global infrastructure projects, but its Solar turbines brand gives it specific exposure. A longtime proponent of environmental responsibility and safety in solar equipment, its name is synonymous with durability and long-term client relationships.

The bottom line
It's a safe bet that some enterprises will benefit from efforts to mitigate the effects of climate change.

The International Energy Agency (IEA) has stated that growing demand in the energy sector will require new investment capital for renewable energy technologies of around $45 trillion between now and 2050.

By making and enforcing policies aimed at rebuilding the global infrastructure with climate-friendly technology, government leaders can profoundly change the economic environment. Companies positioned to take advantage of such changes could become big winners as a result.

Investors who dig deeper will no doubt find other intriguing opportunities in areas like power storage, transportation, building efficiency, land conservation, carbon credit trading, eco-consulting, and many other industries.

Market participants should take notice of these developments, but always perform due diligence before executing trades. After all, good companies don't necessarily imply good stocks, and making well-informed investment decisions is the best way to achieve investment returns that rise like greenhouse gases to atmospheric levels.