NEW YORK (CNNMoney.com) - Like a lot of people, the head of Calpers' environmental fund is hot on one particular renewable energy technology.

"When I get back, the one thing I'm going to talk about most is the incredible focus on ethanol," Winston Hickox, a manager at the nation's largest public pension fund, said Thursday at a New York conference. "The ease of transition to another liquid fuel that is just beginning to be developed, particularly cellulosic ethanol."

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Hickox was part of a conference organized by the American Council On Renewable Energy bringing together renewable energy entrepreneurs and investors, among others.

Under a California mandate, Hickox's fund has nearly $1 billion to invest in clean energy technology.

Like any good fund manager, he said his assets were spread out across the renewable energy spectrum.

Some of his money goes to investments such as Nth power, a $315 million venture capital firm managed by Nancy Floyd.

Floyd said the areas she sees as the best investment opportunities are biodiesel, ethanol and solar.

"There are systematic changes in the global energy market," said Floyd. "It's creating unprecedented demand in new technology."

Some audience members asked if there was already too much money in the sector.

"It's not a small scale area, but a large and growing landscape of different market areas that can be accessed," said William McCalpin of the philanthropic Rockefeller Brothers Fund, noting that 43 percent of institutional investors plan to increase their stake in alternative energy funds in 2006.

And Ira Ehrenpreis of the venture capital firm Technology Partners said investing in green funds is no longer simply a feelgood choice, saying that three solar companies that made IPOs last year are all up 50 percent.

"The perception is you always have to compromise between doing good and doing well," he said. "But this sector is all about the bottom line, not about the trade off."

But there are words of caution.

McCalpin noted that there isn't a long track record for a lot of the firms or funds in the sector, while Floyd said lots of homework needs to be done before jumping in.

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Super ethanol is on its way