In Copenhagen, environmental activists are clamoring for world governments to take action to address the extent and impact of climate change. But while government officials and their political leaders fret about the costs of addressing climate change, a cluster of private equity managers and other Wall Street types instead are focusing on the potential profits to be earned from helping companies with solutions to the problems gain access to capital. Picking up the scent of big business opportunities, some of them have shown up in Copenhagen to both participate in and track the discussions.

“Copenhagen is setting the stage for what our fund will be doing over the next five years and longer,” says John Cavalier, a former Credit Suisse investment banker and co-founder of Hudson Clean Energy Partners. His partner, Neil Auerbach (a former Goldman Sachs banker) is in Copenhagen this week; Cavalier will head to Davos in the New Year to perform similar intelligence gathering at the annual World Economic Forum. He expects a lot of Wall Streeters with an interest in ‘cleantech’ investing to show up there, as well, to monitor the buzz. “If you are an adviser to corporations in the energy and utility space, and you want to be a lead player working with your clients, you need to know what is going on,” Cavalier argues. “Part of your value will depend on how well you understand how renewables fit into the picture and how you can help your client define and accomplish their objectives in cleantech.”

Alternative energy already has emerged as one of the hottest trends in venture capital, with star VC managers like Vinod Khosla (former rainmaker at Kleiner Perkins Caufield & Byers) raising $1.1 billion for two dedicated largely to green investment ideas in September. (One fund will provide seed-stage financing; the other will make $5 million to $15 million cash infusions available to slightly more mature companies. The pace of new green technology venture deals may have slowed this year, but more than half of respondents to a National Venture Capital Association survey (the results of which were released earlier this week) predict a jump in funding next year.

Now the interest in green technology is spreading to the rest of Wall Street, which is slowly starting to recognize that cleantech might end up being just as important and transformative for both the economy and Wall Street as the Internet has been. The best part for Wall Street? These companies—heavily R&D dependent—need a lot of capital, and connecting cash-strapped businesses to interested investors has always been Wall Street’s core function. Most importantly, it’s also a new potential source of fees.

So far, many of those capital matchmakers have been private equity firms like Hudson Clean Tech, many of which have been founded by former "bulge bracket" investment bankers like Cavalier and Auerbach. “It’s a tremendous challenge because the capital requirements still outweigh the available capital.” So says Cavalier, only weeks after his firm closed on a $1 billion-plus investment fund of their own, to put to work in companies developing new solar and wind power generating methodologies and bleeding-edge "smart grid" technologies. “Before these companies reach the stage of maturity where they can go public and earn a bank an IPO fee, it takes a lot of capital and effort,” adds Cavalier. “We are the people getting those companies through the valley of small-business death to the point where they are late-stage enough to be attractive to acquirers or the public markets.”