Investment in the Environment

The Supreme Court has now stepped into the debate over global warming via a lawsuit filed by 12 States and 13 environmental groups against the EPA, charging that it is the EPA’s duty to regulate greenhouse gasses (Article). Initial debate as been over whether or not the EPA has the right or the responsibility to limit greenhouse gas emissions, but at some point the debate will ultimately have to be changed to how to limit greenhouse gas emission. All this got me thinking; what will be the implications on private investment if any sort of law or regulation is put into place?
We’re all aware of the huge push that has been made already into alternate fuels such as ethanol, but those investments have not been as profitable as first imagined and demand could be wavering. Consider the recent ethanol IPO withdrawals. What I’m more interested in is how investments in environmental companies have fared in the recent past. That is, companies that are engaged in promoting the preservation and protection of the environment and wildlife by addressing issues such as clean air and water, global warming and conserving and developing natural resources. According to my sources, since 2000, $1.04 billion of PE money and $120 million in venture funding has gone towards such companies (in the US). And since 2000, these combined investments have had an unexciting return of -3.98%. Now, obviously, any sort of regulation would most likely have a positive effect on overall number of dollars invested and future returns, but since the turn of the century, investment in the environment has not been profitable. Since 2000 investment in environmental companies by VC and PE firms as accounted for just four-tenths of a percent of all total investments. What can be done to increase this number? In an ideal world, these are the sort of investments that would yield the most profit, where environmental profit and monetary profit would go hand-in-hand. I really hope I live to see such a day.