Deutsche Bank's Kevin Parker, who manages $7 billion in climate change-related investments, has thrown up his hands at Congress's seeming inability to pass an energy bill, accusing Washington of being "asleep at the wheel on climate change...[and] on this industrial revolution taking place in the energy industry." Yet, stalemates and sound bites notwithstanding, investment in clean energy is still growing, and appears to have a brighter future than conventional wisdom suggests. Why?

The growth hasn't come entirely independent from government policy. The Obama administration's ambitious plan to double America's renewable energy capacity led to the earmarking of $67 billion in federal stimulus money for renewable energy, biofuels, and such energy efficiency projects as smart grids. Those capital injections helped clean energy investment grow by 72 percent from June 2009 to June 2010, to a total of $43.7 billion for the first half of 2010, according to Bloomberg New Energy Finance.

But even after the botched Copenhagen talks on climate change and the uncertainty surrounding congressional energy legislation, investors and companies are making big bets on green energy. U.S. asset financing for clean energy grew by 40 percent to $4.9 billion between April and June, according to Bloomberg. Meanwhile, Chicago-based utility Exelon, the largest U.S. operator of nuclear power plants, announced its intention two weeks ago to buy John Deere's renewables division for a price that could add up to $900 million. On September 2, Cisco unveiled a bid to acquire Arch Rock, a provider of wireless technology for smart grids. Two Bay Area renewables firms, wind developer Pattern Energy and solar film manufacturer Solyndra, have respectively attracted $400 million and $175 million in private capital since April. An important factor lubricating all of this activity is that banks are far more willing to lend than they were in the credit crunch a year ago.

Why are investors still sinking money into renewables despite the funding gridlock in Washington? Because they understand that, regardless of the apparent death of cap-and-trade on Capitol Hill, some other form of clean-energy requirement is likely. For utilities in particular, which have to take a long-term view because of the longevity of the power infrastructure they own, investment in wind power and smart grids is a hedge against the prospect of future green energy legislation. "Many corporations continue to believe the long-term strategic trend around clean energy and so are making strategic investments to reflect this," Mark Fulton, global head of climate change investment research at Deutsche Bank, told me.

At the same time, "going green" remains trendy; Ikea, for instance, is now the proud owner of six German wind farms. But investors also no longer regard the sector as a mere fashion. "Five to six years ago, the renewables industry was driven by smaller developers willing to take on risk," says Alex Klein, head of renewable power research at IHS. "Now it's become more mainstream." It helps that the sector continues to grow like gangbusters abroad. A big part of the reason for the continued expansion of renewables projects in Europe, even in a period of widespread government budget austerity, is the E.U.'s renewable energy targets of 20 percent by 2020. In addition, China has already outstripped Europe and the U.S. to become the world's leading manufacturer of wind turbines and solar panels. And though Beijing's industrial policy has antagonized some, its large-scale commitment to manufacturing renewable energy components is likely to drive down costs, which in turn will help improve the sector's overall competitiveness with oil, coal, and natural gas.

But green energy still requires some form of policy support to grow, and in the U.S. that is more likely to come from the states than from Washington. Renewable portfolio standards (RPS), which require a specific proportion of power generation from renewable sources, have been approved in 31 states, while six other states have passed conditional renewable targets. The standards effectively guarantee demand for renewables. A June report from IHS Emerging Energy Research estimated that these standards will push up U.S. demand for renewables by 250 percent over the next fifteen years, making them "the most critical driver determining the pace of U.S. renewables growth going forward."

There were plans in place to enact a similar measure at the federal level, and last year the Senate Energy and Natural Resources Committee actually approved a 2020 requirement for 15 percent of U.S. electricity being supplied by renewable sources or energy-efficiency projects. But the standard has since been lost in the hyper-partisan political atmosphere ahead of the mid-term congressional elections. That was a setback for wind power, the most economically competitive of renewables, whose growth has been curbed by low natural gas prices.

It is hard to tell what is down the road in Washington. In terms of bragging rights for what's currently happening, Democrats may claim victory on the back of the federal stimulus and state RPSs, but Republicans could easily argue that private sector and state initiatives have proved decisive. That could mean more gridlock in Washington, but the movement into green energy seems likely to continue elsewhere -- hence keeping investors in the game. "Keeping incentives strong is the key to the renewable markets," Deutsche Bank's Fulton says.