All the talk about the bad oil bubble obscures the potentially good bubble still inflating in the realm of alternative energy. Wind turbine installations more than doubled last year. Ethanol production capacity will nearly double once all the plants under construction are completed. Investors have given SunPower, a solar panel spinoff from Cypress Semiconductor, a market value much larger than that of its former parent.

Such exuberance is characteristic of bubbles that periodically inflate. Some, like the one we’ve had in housing, end in losses and Congressional investigations. Others, like the dot-com boom, leave behind something useful.

During a bubble, investment is spurred by technological progress and new economic assumptions  in this case about the price of oil, climate change and the desire to curb carbon emissions. Government does its part by using subsidies and the tax code to encourage the new industry. Just as in the 19th century the federal government offered land grants to inspire a railroad boom, Congress today is pushing an alternative energy boom by mandating ethanol use and giving generous tax credits for solar and wind-based energy. The investment has already led to more efficient solar panels, wind turbines and storage batteries.

Many of the new alternative energy companies will fail. But that’s when the fun will begin. Think about what happened after the dot-com bust. The commercial infrastructure laid down in the 1990s  fiber-optic cables, servers, payment systems  was put to use by new companies like Google, YouTube and Facebook.