As the world's population increases 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. Investors and governments have been voting with their dollars, pumping billions into the sector. Nearly $8.5 billion in 2008 and $5.7 billion in 2009 of new capital went into investment theme. This year is shaping up to produce similar results. Rapid growth and adoption of various new "green" technologies could spell big rewards for investors over the long haul.

IN PICTURES: Top 10 Green Industries

Not Just Renewable Energy
When most investors think green, they often first turn to the solar and wind industries. Investments such as the Market Vectors Solar Energy ETF (NYSE:KWT) are finding their ways into more portfolios. However, cleantech encompasses so much more than just biofuels and solar power. A widely diverse segment of technology, cleantech is used to describe products or services that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy consumption, waste, or pollution. This wide net includes investments in water, energy efficiency, recycling efforts and pollution controls.

The markets for these various subsectors of cleantech are expected to grow quite rapidly. Analysts predict that energy efficient lighting usage in the form of LEDs will rise 53% for 2010, worth about $8.2 billion. Green Standard buildings now cover seven billion square feet worldwide. The market for such retrofits could be worth over $400 billion. Today, energy service companies earn over $5.6 billion each year with regards efficiency solutions.

China has nearly 120 million people using electric vehicles and that number is growing domestically as well. Consultant group Accenture (NYSE:ACN) forecasts that there will be 1.5 million electric cars on roads in the U.S. by 2015. In the first quarter of 2010, $704 million flowed into green transportation initiatives.

These few examples, combined with the billions of dollars spent on renewable energy and smart grid transmission infrastructure and you have a recipe for long-term portfolio dominance.

Adding Some Cleantech to Your Portfolio
With its broad scope, investors limiting themselves to just renewable energy are missing out on many of cleantech's greatest growth stories. Holding a position in a fund like the iShares S&P Global Clean Energy Index (NYSE:ICLN) is good, but is only one take on the cleantech theme. Luckily, there are many options for investors. The PowerShares Cleantech (NYSE:PZD) presents an overall case for green technologies, as does its sister fund the PowerShares Wilder Hill Progressive Energy (NYSE:PUW). However, volume is light for both funds and investors may be better suited in some of the ETFs individual holdings. Here are a few picks.

Energy Recovery (Nasdaq:ERII) IPO'd at one of the worst times possible, just before the global credit crisis. The economic downturn has been giving investors a chance to own shares in the company for less than their IPO price. As new sources of fresh water are being demanded, many nations are turning to desalination to meet that demand. This process requires an incredible amount of energy. Energy Recovery develops and manufactures devices and pumps that can cut desalination energy usage by nearly 60%.

In order to gain efficiencies in transportation and wind energy, lighter is better. Many manufactures have begun adding carbon fiber to body kits and turbine blades in order to increase strength and decrease weight. Both Zoltek (Nasdaq:ZOLT) and Hexcel (NYSE:HXL) offer a way to play the increasing demand for lighter, yet stronger materials.

Semiconductor manufacturer, Power Integrations (Nasdaq:POWI) specializes in chips that use less energy. The company also produces power supplies for LED lighting, smart meter and inverter applications. The long-term growth of these markets will ultimately trickle down to Power Integrations bottom line. (For more on the inverter market, please see Playing Alternative Energy Through The Backdoor.)

The Bottom Line
As we continue to use our resources at a rapid pace, more emphasis is being placed on conserving those supplies. Cleantech over the long haul could be one of the best portfolio additions. However, investors shouldn't just focus on alternative and renewable energy. Pollution mitigation, energy efficiency and water improvements all will play a big role in the "greening" of the world. The proceeding companies and ETFs are just a small percentage of the opportunities for a portfolio.

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