Detroit isn't the only one getting a smackdown.

Just days after slamming the authoritative gavel on the auto industry, which resulted in the forced ousting of CEO Rick Wagoner, Congress is now set to begin marking up an energy bill that is sure to spark controversy. . . and profits.

Of course, billions rest on the outcome of Detroit's debacle. But hundreds of billions, if not trillions, rest on these coming energy decisions.

Fact is, cars are useless without an energy source, whether it's gas or electric. And I suspect some of the conditions for aiding the auto industry will include increased efficiency and a push toward electric.

So in many ways, Detroit's future — and our portfolios' — hinges on this year's energy bill

2009 Energy Bill: Hype, Hope, and Hubris

Contention is always thick whenever the energy bill comes up in Congress. Loyalties always run high.

Representatives from coal states favor coal. Representatives from oil states favor oil, and so on.

That's why this year's bill is such a risk for all parties involved. It's winner take all.

Included in the bill is everything a Green Chip investor could ask for. We have everything to gain.

Unfortunately, that also means we have everything to lose.

On the line are a national renewable energy standard (RES) — once called a renewable portfolio standard (RPS) — and the creation of a cap-and-trade program. . . two things I've affectionately referred to as the combined Holy Grail and Holy Goblet of renewable energy's future.

The RES floated by Jeff Bingaman (D-N. M.) would require utilities to get 16% of their electricity from renewable resources by 2019 before jumping up to 20% by 2021.

This would guarantee a market size for renewable energy at a much higher level than the marginal 3% or so where it currently stands, and would send related stocks soaring.

But this bill is a one-two combination. The RES is only the first jab.

A cap-and-trade system would limit the amount of carbon companies can put in the air. Utilities that burn coal would be hardest hit, and renewables would grow in cost-competitiveness as their fossil cousins' costs skyrocket.

Not only will this bill mandate the increased use of renewables. . . it will make it much cheaper and attractive to use them.

Yes, this bill will make it much easier to reap profits from the cleantech sector. . . if it passes.

You see, the strategy this year is different than most.

Rather than tackling important provisions one at a time, some Democrats plan on using their newfound strength to ram through several measures in one bill.

With strong GOP opposition, and even a few concerned democrats, hubris could rear its ugly head.

Put simply, this bill is either going to wind up doubly successful or doubly disastrous.

As a green investor, you'll have to stay on top of this legislation. Its outcome is of paramount importance.

Energy Bill: a Roadmap

It's very likely no significant action will be taken on this bill until after the Easter Break.

There are a lot of players involved, so I'll do my best to spell it all out for you here.

Henry Waxman (D-Cal.), who is Chairman of the House Energy and Commerce committee, is expected to float one bill containing both provisions by the end of the week.

In the Senate, Majority Leader Harry Reid (D-Nev.) has also said he supports a one-bill strategy. But some of his energy panel colleagues disagree.

The aforementioned Bingaman, for example, and Lisa Murkowski (R-Alaska) favor separate legislation for the RES and cap-and-trade. They will be taking up four different energy provisions today, none of which involve an RES or cap-and-trade.

So you see, the number of chefs is growing. And if my senses are correct, we're going to have to let this one stew a long time.

By that I mean green investors will eventually get both needed provisions, just not all at once. Congress will likely take the Bingaman approach, working methodically to ensure the long-term viability of each policy.

His spokesman, for example, indicated that these first few steps are only a "foundation" Congress "will build on later," perhaps in later preliminary sessions or when the bill comes to the floor.

I guess good things come to green investors who wait.

And wait we shall. Sentiment from the Senate energy panel is republicans have not yet settled on their energy priorities. Their agenda likely won't coalesce for a few more weeks.

So this roadmap ends where it started, with no real action until Easter.

Problems, Passage, and Profits

After the bunny's hopped, and Congress gets serious about passing an energy bill, problems will arise the same way they always do, from partisan disagreements.

Republicans will argue that cap-and-trade will hurt the economy, and will fight against a nationwide RES since southern states have enough coal to last decades. Democrats will tack on egregious liberal policies to strengthen the plans they really want passed.

Further problems could ensue if the House and Senate pass varying energy bills, which always happens. Any differences would have to be reconciled between parties and chambers.

In the end, though, I see passage of both cap-and-trade and a national RES this year. The omnibus attitude and bills we've seen so far from this administration, along with the penchant for sweeping change, are only going to continue.

A far-reaching energy bill would allow for both. And you can bet democrats won't show any weakness — they're more than eager to flex their newfound strength and exploit strong public support.

While partisan debate could water it down just a bit, I expect the final energy bill will be a strong indication that renewable energy is the way forward, and that the government is willing to enact policies to make it happen.

In turn, that will send a strong signal to the market. It'll be the signal we've been waiting for, and green chip stocks will be off to the races.

It's hard to say exactly which stocks will be winners until the final version is passed. But holding a few renewable energy ETFs should guarantee you great exposure. I like Market Vectors Global Alternative Energy (NYSE: GEX), but there are plenty out there worth taking a look at.

Call it like you see it,

Nick

P.S. Fresh off the recent stimulus, and in anticipation of the energy bill, renewable energy stocks are already starting to rise. Many are up more than 40% in March alone. And Alternative Energy Speculator members have been cashing in, having closed nine winning positions this month with many more positions in the green. Click here to begin profiting today.

P.P.S. In just a short time, I'll be attending the 6^th Renewable Energy Finance Forum—Wall Street. Not only will cleantech policy be covered in depth, but you'll hear it from DoE decision makers and company heads. Click here or on the banner below to learn more.