Generally, when investors tend to think about green investments, renewable energy sources like solar and wind are the first thing that pop into their minds. As such, these “sexy” growth opportunities often command the lion share of investment dollars. That’s evident by the surge in assets under management in popular ETFs like the iShares Global Clean Energy (NASDAQ: ICLN).

Yet, there’s more than one way to skin a cat.

And in terms of green investing, the boring concepts of energy efficiency and pollution remediation could actual make portfolios more money over the longer haul than sexier solar and wind power. For investors, there’s a wide world of cleantech ripe for the picking.

Focusing On The Low Hanging Fruit

As the world's population continues to increase at a rapid pace, so does the pressure being placed on our planet. With these growing demands for energy and commodities consumption, many investors are looking towards technology as a way to mitigate these challenges.

Enter cleantech in all its glory.

While renewable energy does fit under the cleantech umbrella, the concept is much more than just solar panels and biofuels. As a widely diverse segment of technology, cleantech is used to describe products and services that improve productivity or efficiency while reducing costs, inputs, energy consumption, waste, or pollution. This wide net includes everything from energy efficiency and recycling efforts to pollution controls.

And spending on the non-renewable side of cleantech is rising quite quickly.

With energy usage expanding rapidly, many business and governments have turned towards energy efficiency measures to save money over the longer haul. Using less can actually be a smart strategy to grow corporate profits. And with the U.S. Department of Energy (DOE) reporting that buildings account for nearly 70% of the nation's electricity demand, spending on smart HVAC systems, high-efficiency lighting and installation continues to rise. According to the DOE, spending by private businesses and homes on energy efficiency will double by 2025 to hit more than $9.5 billion per year.

At the same time, one of the nasty side effects of quickly expanding economic growth is pollution.

Throughout history, almost no country that has risen to be a major industrial power, has done so without creating widespread environmental damage. In the developed world, we’ve started to seriously consider what we’ve done in the past and “green” now factors into many businesses decision making processes. Meanwhile, nations in the emerging world are beginning to seriously consider pollution as well. The total global air pollution mitigation market has grown by a compound rate of nearly 10.6% over the last six years, while global spending on water pollution will surge to $1.2 trillion by 2025.

Playing the Total Cleantech Package

These few examples show just how big cleantech is and is getting. For investors, that means casting a wider net beyond just solar stocks- like First Solar (NASDAQ:FSLR) -could lead to more portfolio profits over the long haul. A great starting place is the PowerShares Cleantech (NYSE:PZD).

The ignored fund tracks a wider range of green technology firms than its more popular sister ETF- the PowerShares WilderHill Clean Energy (NYSE:PBW). That includes exposure to grid firms like ABB Limited (NYSE:ABB) as well as lighting specialist Cree (NASDAQ:CREE). That broad focus has actually allow PZD to outperform its renewables-only rivals by a wide margin. Expenses for the ETF run 0.67%.

Water sanitation continues to be a paramount issue and carbon filters are some of the most effective methods at removing chlorine, sediment and other volatile organic compounds from water. Calgon Carbon (NYSE:CCC) is one of the largest manufacturers of activated carbon and filtration systems in the world and has been growing its market shares in places like India and China. In addition, Pall (NYSE:PLL) can be used as a water filtration/sanitation play.

Finally, smart heating and cooling systems spending has jumped over the last few years as businesses try to cut long term energy costs. Johnson Controls (NYSE:JCI) continues to be the building retrofit king-pin- registering 8.6% growth in 2013. Overall, management at JCI expects continued new construction gains in the U.S. to help its smart HVAC systems grow its bottom line. JCI shares can be had for forward P/E of just 12.

The Bottom Line

Cleantech is much more than just “sexy” renewable energy like solar and wind. Covering a wide range of ideals, spending in the sector is poised to continue growing in the years ahead. That might just grow investor’s portfolios as well. The previous ideas- along with smart grid play Digi International (NASDAQ: DGII) –make ideal selections to play the trend.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.

Related Articles
  1. Investing Basics

    Top Tips for Diversifying with Exotic Currencies

    Is there an opportunity in exotic currencies right now, or are you safer sticking to the major ones?
  2. Mutual Funds & ETFs

    The 3 Biggest Mutual Fund Companies in the US

    Compare and contrast the rise of America's big three institutional asset managers: BlackRock Funds, The Vanguard Group and State Street Global Advisors.
  3. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  4. Professionals

    5 Top-Rated Funds for Your Retirement Portfolio

    Mutual funds are a good choice for emotional investors. Here are five popular funds to consider.
  5. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  6. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  7. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  8. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  9. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  10. Chart Advisor

    Bumpy Roads Ahead In Transportation

    Investors are keeping an eye on the transportation industry. We'll take a look at the trend direction and how to trade it.
  1. What are cleantech stocks?

    Clean technology, commonly referred to as cleantech, is a term used to describe environmentally-friendly technologies that ... Read Full Answer >>
  2. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  3. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  4. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!