Green Businesses and the Possible Dangers of Investing in Them

Good friend Mohanakrishnan posted this analysis on his investments blog about a company that has plans to manufacture biodiesel in the Southern Indian city of Hyderabad: http://mohanakrishnanb.blogspot.com/2008/12/interesting-small-cap.html and raises some very interesting questions that highlight not only the possible benefits and risks of investing in green businesses, but also, by extension, of the difficulties that potential entrepreneurs in this area face. The company that he speaks about is planning to manufacture and supply Bio-diesel to a Bus Transport company. It also plans to make money by selling carbon credits for the whole business of growing Jatropha and collecting carbon offset payments from polluting industries elsewhere. While, on the surface, this seems like a good idea, how is a potential investor to evaluate the business concerned before putting their money into the concerned company's shares? And, conversely, how is a potential entrepreneur who has plans to do something similar, to raise money for his / her business? The questions are intriguing, and, if you ask me, worrying as well. On them depends the future of the green dconomy to use a heavily clicheed term. Any responses to this question would be most welcome.