During the administration of President Reagan, the defense sector boomed as never before. Under his successor George H.W. Bush, the bond market enjoyed unprecedented gains. The high-tech industry reached stratospheric levels under the policies of Bill Clinton, while George W. Bush was Big Oil’s best friend.

The presidency of Barrack Obama is only a few days old. But we already have a good indication he’ll be smiling on at least one industry: green energy.

Green energy encompasses development of alternative energy, efficiency-enhancing technology and processes that reduce environmental degradation. All were big winners in the president’s stimulus package, which calls for massive new spending on environmental cleanup, alternative energy and “smart grid” technology to improve efficiency, as well as more mundane measures such as insulating government buildings and schools.

Green energy development advances both key energy policy goals of the Obama administration: building US energy independence and reducing the carbon dioxide emissions blamed for global warming. And the president’s moves have already gained the support of at least one influential energy industry leader, and vocal advocate of both goals.

In a statement released this week, T. Boone Pickens lauded President Obama’s “commitment to making true energy reform a hallmark of his presidency by using the stimulus package.” Further, he asserted the new president “clearly understands the threat foreign oil dependency has over us–bankrolling dictators, unwillingly supporting nuclear proliferation, and funding both sides of the war on terrorism…A program focused on renewable energy, conservation, improving the grid and replacing foreign oil with domestic resources in our transportation system is something I believe will create hundreds of thousands of jobs, revitalize our economy and enhance our homeland security.”

Those are powerful words indeed. And they mirror those used by the new president in comments this week as well as at his inaugural address on the National Mall last week, which I was fortunate to attend. Equally important, he’s already begun backing them up with direct executive action.

This week, President Obama ordered the Environmental Protection Agency (EPA) to reopen the case of California’s waiver to regulate automobile tailpipe emissions. The Bush II EPA had rejected the state’s efforts to tighten standards, over the virulent protests of popular Republican Governor Arnold Schwarzenegger. That may set off moves in other states to regulate emissions as well.

Obama’s move on tailpipe emissions is only the first of many reversals in environmental policy from Bush administration positions. And it’s a major plus for the companies highlighted in Gregg Early’s Beat 3.0 article Buying into the Future of Cars.

The Obama energy plan does face some formidable hurdles. Several US Senators have taken issue with individual spending provisions embodied in the omnibus stimulus package. One of these is a complicated renewable tax fix that would essentially allow companies to convert tax credits into cash. That will enable them to more easily securitize construction financing, which has become increasingly problematic for a growing number projects in recent months due to frozen credit markets.

The fix is contained in the bill that passed the House Ways and Means Committee last week. But despite the support of Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM), it failed to clear the Senate Finance Committee. Unless it’s put back in per the president’s wishes, it will continue to be very difficult for many players, particularly smaller ones, to get projects off the ground.

According to the CEO of the Solar Energy Industries Association, reaching the president’s goal of doubling renewable energy production in three years will require a doubling of the tax equity market this year, a tripling by 2011 and a five-fold increase by the end of the year. That’s highly unlikely under the US Senate’s watered-down plan.

Ultimately, the biggest strike against the alternative energy market in early 2009 is the massive decline in fossil fuel prices we’ve seen since mid-2008. Simply, the USD100 per barrel nosedive in oil and two-thirds haircut in natural gas prices has removed any economic incentive to stop using those fuels. In fact, it’s doing precisely the opposite, even as it’s discouraging new production.

The drop in conventional energy prices has been due entirely to concerns about what a sliding global economy will do to demand. Until economic growth returns, energy prices will remain in the doldrums, and so will the incentive in the private sector to expand use of green energy.

Sooner or later, growth will return. Energy demand will rise to more normal levels and supply won’t be there to meet it. Oil and gas prices will spike to new highs. At that point, demand for green energy will return with a vengeance, and so will investor interest and dollars.

Until that happens, the US government will be the only reliable financier of green energy, and new regulations will be the only incentive for the private sector to adopt the new technology. President Obama has shown his willingness to use both levers. And while there are plenty of battles left to fight, he’s found the winning political argument to get it done, combining national security concerns with Americans’ anxiety about the economy. But as long as the economy remains challenged, presidential power is far more likely to benefit the big and strong.

The New World 3.0 Portfolio is up 23 percent since inception in late September 2008. That’s largely because we’ve focused heavily on quality. And, while our Cutting Edge Technology picks are very much in the hunt for big gains going forward, our focus is still mainly on companies that can make it in a tough environment as well as score government business.

One group poised to do both comprises companies involved in “clean coal” development. There’s a sizeable segment of the environmental community that opposes any new plant burning coal. Yet with half of America’s power generated by coal, “killing coal” would be a major setback to the Administration’s goal of energy independence, forcing more reliance on imported energy. And it would risk a major ratcheting up of utility rates as well, potentially exacerbating the recession.

As a result, the president’s emerging coal policy looks like it will be focused squarely on science, and mainly making coal power more palatable for the environment. I look at several of the companies in my Beat 3.0 article Cleaning Up Coal.