William Grove invented the fuel cell in 1839. Denmark generated electricity from wind turbines in the late 19th century. In the 1920s, Henry Ford experimented with bioplastics in the manufacture of automobiles. His first car, built in 1896, ran on ethanol, a fuel that also (in combination with turpentine) powered an engine designed by Samuel Morey in 1826.

That entrepreneurs are still trying to commercialize these venerable technologies speaks volumes about the investment rewards and risks discussed in Billion Dollar Green: Profit from the Eco Revolution. On the one hand, immense profits can be expected if R&D ever makes these technologies cost-competitive with fossil fuels. On the other hand, the elusiveness of that goal lends an inherently high degree of speculation to “green” stocks.

Government subsidization of environmentally friendly energy sources offers a way around the obstacle of commercial competitiveness. For some technologies, however, the cost handicap is so great that political support may prove unsustainable over the long run. For example, the U.S. Department of Energy (DOE) has determined that fuel cells (devices for converting chemical energy into electricity) must achieve a cost of $1,000 per kilowatt-hour to be competitive with conventional power generation. The DOE estimates that fuel cells currently produce electricity at a cost of $3,000 per kilowatt-hour, a figure that some experts believe is understated by as much as 70 percent.

Author Tobin Smith, editor of ChangeWave Investing and a regular contributor on the Fox News network, explicitly characterizes investment in wind power as a bet on the continuation of legislation that promotes its use. In the case of ethanol, the maintenance of political enthusiasm has been complicated by evidence that extensive use of corn in biofuel production has contributed to inflated food prices. Already, three pure-play ethanol companies that Smith deems “good” or “worthy of consideration” have gone bankrupt or placed their ethanol-producing subsidiaries in bankruptcy.

Some readers may conclude that many green companies are faddish, early-stage enterprises, much like the dot-coms before them. As single-business public equities, they may offer outside investors too much of the risk and too little of the upside. A more attractive way to obtain exposure might be through venture capital funds or stocks of large, diversified companies with promising projects in the alternative energy sector.

Nevertheless, Smith addresses his book to those intrepid investors who hope to find the green stocks that will emerge from the crowd, stocks whose value will be multiplied many times over. For all we know, a few huge winners could very well come out of the more than 100 public companies on the author’s Master List of Green Companies (not all of which are pure plays).

Billion Dollar Green is an excellent introduction to the plethora of technologies represented on Smith’s list. The environmentally sensitive zeitgeist may create investment opportunities in products and services as wide ranging as electric vehicles, solar cells, virtualization software, organic food retailing, methods of limiting emissions from the burning of coal, and water treatment, as well as advanced batteries, electric meters, and lightbulbs. Smith argues that the commercial potential of these cutting-edge technologies is vast because of the needs they meet. He explains the underlying science in clear, simple terms, leaving readers to pursue additional technical details in other sources.

Readers should be forewarned that they will have to extract the book’s genuinely useful information from pages of breathless and intensely self-referential prose. Smith’s preface is the most self-congratulatory that I have encountered in two decades of reviewing books for this journal (e.g., “We have consistently chosen the winning horses,” “We have already earned significant triple-digit profits,” “I have personally earned seven-figure wealth”). But all this boasting pales in comparison with the “thousand percent gains” that Smith promises will occur in second- and third-generation green energy.

The copyediting could have been tighter on Billion Dollar Green. Dangling participles, such solecisms as “took precedent” (read “precedence”), and repetitive wording (“Right now there are approximately 800 million motor vehicles currently operating in the world”) occasionally impede the otherwise brisk exposition.

Most practitioners, however, will not be deterred by Billion Dollar Green ’s stylistic shortcomings, nor should they be. After reading the book, they will be far better informed about an industry with extraordinary growth potential, which the author documents extensively. At this very moment, armies of researchers are assiduously pursuing the golden fleece of commercial competitiveness, the attainment of which could finally enable long-known alternative energy sources to fulfill their vast promise.

—M.S.F.