The number of companies involved in renewable energy raising money on the London Stock Exchange has risen dramatically this year as the City establishes itself as the international market of choice for anti-global warming opportunities.

Initial public offerings (IPOs) for companies in the sector have risen from one in 2001 to an estimated 25 this year.

With public opinion moving towards a recognition that carbon dioxide emissions must be cut to stem the steady warming of the planet, alternative energy companies are finding favour with investors. In the first seven months of this year fifteen renewable energy companies listed in London, raising £490 million. Last year a total of 16 companies raised £353 million.

The destination for these flotations has been the Alternative Investment Market (AIM), with nearly a tenth of the money raised this year made by renewable energy businesses.

Hugh Maule, partner with the IPO advisers Lawrence Graham, says: “As far as I am aware, pre-2001 very little equity was raised by renewable companies on the public market. Development and venture capital was the preserve of the private venture capital funds.”

The rapid increase in the number of companies floating in London has prompted some in the industry to call for a dedicated renewables sector, which would raise the profile of these companies. At present they are included in the financial or support services sectors.

The largest “green” IPO so far has been Infinity BioEnergy, a Bermuda-based investment fund that buys ethanol assets in Brazil.

Trading Emissions, a carbon credits trading company, has been the second-largest, raising £135 million in April 2005 and a further £175 million this year.

One of the best-performing renewable companies on AIM is Clipper Windpower, an American turbine manufacturer based in California. Its shares have risen from 189p a year ago to 562p.

Wind and biofuel so far have been the best-performing areas, research by Growth Company has shown. Its research also revealed that the largest institutional investors in the City are getting involved with renewable energy companies — it is no longer merely the preserve of environmentalists trying to invest their pension funds. Merrill Lynch has the largest holding, with a total of £103 million invested, followed by Investec, with £60 million.

These are small sums compared with the money invested in traditional, carbon-based energy companies, but analysts believe that the sector has huge potential.

Neil Eckert, who has brought three renewable companies to market in the past three years, says: “There is a fantastic opportunity here. Most people now believe that CO2 emissions have to be reduced significantly to stop global warming and that makes renewable energy vital. We have got to have it — and that is opening up this market.”

Mr Eckert says that there has been a big increase in interest in renewables in the City since he floated Climate Exchange in 2003. However, he advises investors to be wary of dud investments in this booming market: “Whenever you get a booming sector, you find some genius business plans, but you also get a lot of chancers. It is like the dot-com period.

“The other problem is that a lot of companies are promising jam tomorrow and these can be very speculative investments.

“But somewhere in the pack is the next Google.”

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