Governments are merely fiddling at the edges when it comes to tackling climate change because alternative energies will never fill the gap left by fossil fuels, according to a director from UK group Standard Life Investments.

Standard Life Investments director of strategy Frances Hudson told InvestorDaily there were enormous opportunities for investors in climate change but the real drivers of the alternative energy markets were not fluffy green issues, but governments' fears over high fuel prices and energy security.

Hudson said coal and clean coal technology as well as nuclear power gave governments' energy security and lessened their reliance on extracting fuel from dangerous parts of the world at increasingly high prices.

The carbon trading market, although exploding in terms of volumes, was "pathetic in terms of price", she said.

Hudson called carbon trading the least real market and said water and alternative energy were far more important, especially in Australia.

"Clean technologies are taking over . . . investors should look at equipment providers rather than the utilities themselves and the technological side of water generation such as desalination plants. Carbon trading is just another commodity market," she said.

Other ways to make money from climate change include investing in so-called catastrophe bonds, which take advantage of insurers offsetting their risks, weather trading and climate appropriate cropping.

Hudson will be talking about investing in climate change at the Investment and Financial Services Association conference in Brisbane this week.