Trend: Energy efficiency is the most promising path for saving energy and investing in the current environment.
Tom Konrad at Alternative Energy Stocks describes an energy efficiency portfolio that is heavily weighted towards engineering, industrial, and utility companies with truly international operations, insulating them from a likely US recession and declining dollar. They're also uniformly profitable, often with low price to earnings ratios, and relatively high dividend yields.
Without direct government support, the sectors likely to suffer the least are the ones which are already economic. Top of the list is Energy Efficiency, which might actually gain from a cut in subsidies for renewable energy, as green House Gas production efforts shift away from Renewable. Among renewable energy technologies, Geothermal, small Hydro, and Wind are already cost competitive with fossil competitors in the best locations. Biomass and Biodiesel are also cost competitive when using waste as feedstock.
Most of the best companies in Energy Efficiency (especially when it comes to energy Efficient Buildings) tend to be systems integrators, large companies with strong energy efficiency arms. These companies have an added advantage for a risk-adverse investor: built-in diversification. This brings me back to a way even the most cautious stock market investor can participate in the Alternative energy Boom: By buying the companies in my Blue Chip Alternative Energy Portfolio: large, profitable companies that stand to gain from increasing energy prices and carbon regulation.