The green energy sector, along with related exchange traded funds (ETFs), has seen one of the largest influx of new money as governments worldwide acknowledge the importance of green technology and its effect on their economies.

All over the world, governments have set aside money for the green energy sector to help get their economies on course, writes Charlie Thomas for FTAdviser. The combined allotment for “green money” in global stimulus packages may be more than $500 billion.

Earmarked funds are being spent on climate change-related investments, such as improvements to railway, grids and water infrastructure.

  • The European Recovery Plan involves investments in energy, including offshore wind and carbon capture and storage.
  • The American Recovery and Reinvestment Plan will improve renewables, building efficiency, low-carbon vehicles, mass transit, grids and water.
  • In December, a climate change meeting in Copenhagen will try and bring more countries, such as China and India, into the environmental accord. Energy efficiency and alternatives will also be addressed. Even if a global agreement on key issues is not met, individual countries will likely continue on with their own projects.

Green technology is becoming popular, but investors should be wary of a possible “green” bubble that could form as a result of hype. (Read how to protect yourself from bubbles). This sector is more of an emerging technologies sector, and investors should note the possible high volatility and risks involved. Find out how to follow trends here.

For more information on green energy, visit our alternative energy category. Among the many ETFs to choose from in this sector include:

  • Market Vectors Global Alternative Energy (NYSEArca: GEX): up 7.8% year-to-date


  • iShares S&P Global Clean Energy Index Fund (NYSEArca: ICLN): up 7.4% year-to-date