The November election of Barack Obama is great news for the renewables industry. The President-elect has pledged to implement a carbon trading system in which emissions rights are auctioned, rather than given away. The proceeds from this will be used to fund government spending on renewable research, development, and infrastructure to the tune of $15 billion per year for 10 years.

President Obama made it clear that one part of his $3.6 trillion budget proposal was not up for negotiation. And that one area would be alternative energy development. As he’s committed a good chunk of his time right now to pushing for both a popular and Congressional approval for the budget, he spoke with energy experts today to further that cause. “We can remain the world’s leading importer of foreign oil, or we can become the world’s leading exporter of renewable energy,” he charged. According to his current plan, that would require $39 billion for the Department of Energy with another $20 billion in tax incentives for clean energy projects.

How can you make money from it?

OK, that might be a little bit cynical - and yes, we all should do our part to maintain a healthy planet for all of our sakes - but let’s face it, the green movement is a powerful one with a lot of potential profit just waiting to be claimed.

That’s especially true since Democrats took over Congress back in 2006 and President Obama took office in January of this year. Since the issue is generally championed by the left, and with liberals now controlling both the legislative and executive branches, the alternative energy faction has even more power behind it. Two Steps To Saving The Planet And Making Some Green

There are really only two key steps to finding the perfect green company to invest in…

First off, decide what kind of up-and-coming technology you want to invest in. If you want to invest directly in the movement, it’s best to look into companies that produce wind turbines or solar panels.

Or if that seems a bit too speculative for your liking, there are plenty of businesses that have joined the green movement in one way or the other, whether through developing fuel-efficient cars and hybrids or simply advertising their eco-friendly attitude widely with appropriate changes in their every-day business decisions.

Once you’ve decided exactly how you want to invest in the green drive, then it’s time to put aside your eco-enthusiasm in favor of rational judgment and good-old fashioned research. Keep in mind that just because a company claims it’s saving the planet doesn’t mean a) it’s telling the truth or b) it has any ability to save itself.

Treat “green” companies just as you would any other stock pick: with careful consideration and a healthy dose of skepticism.

The California net metering cap has been increased by the State Assembly from 2.5% to 10%. Net metering allows people who generate electricity at their homes (with solar or wind generators) to sell any excess energy they produce, net of what they use, back to the grid. The cap was previously 2.5%, meaning that PG&E and other utilities weren't accepting new participants to the program once the excess reached 2.5% of the total load, but the increase creates incentives for new participants in the program, meaning more people installing residential wind and solar generators.

To those who argue that the alternative energy legislation now in place (with more on the way) will have the same damp effect as the efforts to increase ethanol production, you’ll get no argument from me that Bush’s foray into ethanol was misguided at best.

But unlike ethanol, solar, wind and geothermal tax credits have been catalysts for those respective industries and energized them.

Improvements in technology have resulted in generation costs on par with - and in some cases, below - conventional fossil fuel sources.

And with regard to solar in particular, costs per watt are on track to fall by another 50% over the next few years. And in spite of the lower costs, industry margins will be in the 35% to 50% range, three times what they are today. That’s a recipe for increased earnings if I ever saw one.

The $200 Billion Alternative Energy Sector

Over the past two years, about $200 billion has flowed into the alternative energy sector - about right for a capital-intensive business like that.

After all, if it weren’t flowing into alternative energy development, one of the few other places it could go would be to pay for higher oil. But perhaps it’s easier to describe where it won’t be going…

Forget fossil fuels. No one wants a fossil fuel plant in their backyard (and few are even planned, let alone being built).

Forget about any new nuclear power plants here in the U.S., too. Only a few are even in the permit stage (a 10-year process in itself), with subsequent construction lasting 10-15 years at a cost of $15-20 billion.

In fact, back in June 2008, Moody’s estimated that the cost of power from a nuclear plant could exceed $7 per watt - 10 times higher than solar’s $0.70 per watt cost. And then there’s the spent fuel issue, decommissioning, etc.

Beefing Up Alternative Energy… Not Foreign Oil

Given that the U.S. alone spends over $500 billion every year on foreign oil, there’s plenty of room to beef up spending on alternative energies like wind power.

Besides, we don’t really have a choice. Cheap energy is the key ingredient that drives healthy economic growth. And the problem with coal, oil and natural gas is that they’re all finite resources - with best deposits (those with the highest energy content) already used up.

Combine that with oil prices that will likely be closer to $100 a barrel by the end of the year… and interest in alternative energy will reignite.

And to those who argue that alternative energy is a speculative business, I’d counter with the fact that we’re talking about investment, not speculation.

For example, because of the tax credits I mentioned earlier, many start-ups already exist - particularly in the solar sector, where no less than 143 companies are currently in the thin-film segment of the industry.

Now, in an economic environment like this, there’s no question that they won’t all survive. But those who do will have viable, long-term businesses, supplying the world with much-needed alternatives to fossil fuels.

Fossil fuels are on their way out. Green energy is on the way in.

The change won’t happen overnight, though. It’s going to be a 20- to 30-year process - which is why it’s destined to be such a great opportunity for investors.

It’s not just an “American social responsibility” thing, either. It’s global. Right now, in fact, our alternative energy progress is way behind many other nations.

Take Portugal, for instance. Over 60% of the country’s energy comes from renewable resources - and its goal is to hit 100%. China and Germany also have aggressive alternative energy generation plans underway.

And because of all the government tax incentives dangled in front of the sector’s players, cost-effective solar panels and wind generators are already in use, busily generating power that produces no greenhouse gases - and more importantly, don’t use a drop of oil when running.

Here’s the bottom-line…

Alternative Energy’s Target-Rich Destiny

The world has such a monumental need for cheap energy that alternative energy is destined to remain a target-rich environment for many years to come. Will some companies make for better investments than others? Of course… just like in any other sector.

But I don’t believe we’ll see a bursting bubble in two to three years. Actually, a mini-bubble popped last year when oil dropped from $147 a barrel to the current level around $48 today.

This drove many solar, wind and geothermal stocks down as much as 80% - with current valuations as low as they’ve ever been in many cases.