This week, The Economist features a report on the recent trend of venture capital investment in renewable energy companies. According to the report, investment in the field by venture capitalists and private-equity firms has quadrupled in the past two years, from some $500 million in 2004 to almost $2 billion so far this year.

Of course, this being The Economist, the sharp increase in investment is a cause for concern, as is the industry being invested in. One can't help but notice the condescending tone, especially in the title ("Tilting at Windmills"), the recurring references to the dot-com boom, and, as if you didn't get the point, the cover featuring a picture of a child with sunglasses, gazing at the sky. The author surmises: "clean-energy fever is being fuelled by three things: high oil prices, fears over energy security and a growing concern about global warming." A fourth factor -- the limited long-term supply of fossil fuels -- is not mentioned. Nor is the fact that a few very profitable companies arose from the dot-com boom.

The article notes the corresponding trend of government subsidy for clean energy technology in US states like California and New Jersey, and in the EU and Japan. Ultimately, The Economist concludes, the industry is dependent on subsidies, and focuses on the risk that could accompany erasure of those subsidies in the future. This, of course, is why we need The Economist. There is definitely some risk if subsidies disappear, as shown by a bar chart showing the drops in wind energy capacity installed in 2002 and 2004, when a federal tax credit lapsed (surprisingly, The Economist does not attack alternative fuel subsidies on the merits, recognizing the market's failure to account for fossil fuel pollution). But the recent Democratic sweep of Congress, combined with the election of the Governator in California, and Elliot Spitzer here in New York, bode well for a continuing subsidy (combined with imminent CO2 regulation). And, one should remember, fossil fuels themselves enjoy certain subsidies, including tax breaks and federal land grants.

I guess the fossil fuel subsidies are in less danger of disappearing due to campaign contributions, and their lobbists' presence in Washington. Perhaps the green energy companies should devote some of their new capital to political campaigns and lobbyists as well.

As for the average investor, there are now specific and accessible securities on the market that allow us to all support green energy, and, hopefully, turn a profit doing it. For example, this month, Kiplinger's features an article on "Profiting in Biofuels," which suggests that some companies' biofuel business are worth a buy. If you are an investor of The Economist's stripe -- that is to say, concerned about the "bumpy" road ahead for clean fuels -- check out an exchange-traded fund like Powershares' Wilder Hill Clean Energy Portfolio, which levels out risk by investing in a basket of mostly small-cap companies, including Ballard (Fuel Cells) and SunPower Corp.

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