Venture capital and private equity investment in green technology jumped 120 percent to $1.3 billion last year, according to a recent report from market research firm Zero2IPO.

Domestic and overseas venture capital and private companies made 55 alternative technology deals last year, up 175 percent from 2007.

“The global credit crunch may make investors more cost conscious about green investment but is unlikely to reverse the long-term trend toward renewable energy,” said Zheng Xingguo, vice president of Zero2IPO.

But Gary Reischel, founder of Qiming Venture, a Shanghai-based venture capital firm, said the green investment could be significantly affected by the global credit crunch.

Many alternative energy projects will be unable to raise money since the technology they use is not proven, he said.

Some types of renewable energy will remain strong and investment money will shift accordingly, going from biodiesel to wind energy, he said.

“Qiming is still raising money in areas like solar, wind and water treatment,” he said. “Silicon solar cells are bad right now but there is a lot of investment in thin-film, the next generation of solar cells.”

Qiming only made one green technology deal in 2008 but will probably make three or four such deals in 2009, investing between $15 and $20 million in wind turbine components, thin-film solar cells and water treatment, said Reischel.

Charles Liu, founder of Hao capital based in Beijing manages $600 million in two funds, said he looks for deals in alternative energy sectors.

Hao capital invested 100 million yuan in waste incineration in 2007, but didn’t make any green technology deals in 2008.

But for this year Hao capital will probably spend $140 million in alternative energy investments such as thin-film solar cells that are backed by the government, he said.

The Chinese government is promoting green energy in its efforts to expand domestic demand, which bodes well, he said.

“Investments are continuing in many different renewable technologies but nobody is certain how the economic slowdown will affects the greentech industry in the long run,” said Ellen Carberry, venture partner of Hao capital, and managing director of the China Greentech Initiative (CGI), a commercial collaboration of the green technology companies. She said a lot depends on government policy.