Green power a new clean mantra in Silicon Valley

Like any industry worth its lobbyists, Silicon Valley pushes hard for the legislation it wants.

And this year, it wants a new federal energy law. A climate change law, too.

The valley has thrown its considerable clout behind legislation that would increase America's reliance on renewable power and provide tax breaks for new energy technologies. The tech industry has been pushing for a national system to reduce greenhouse gas emissions and funnel more federal money into energy research.

Energy legislation used to be the domain of lobbyists from Big Oil and Big Coal, not tech. But the valley now has a vested interest in the outcome.

Startups throughout the Bay Area are designing new kinds of fuel, more efficient solar cells, better windmills - even electric cars. Government policies on energy and global warming could make a big difference in how fast the green tech industry grows and whether some of its innovations ever leave the lab. Federal legislation, tech leaders say, could help new ideas compete against the fossil fuels that are slowly warming the globe.

"It's going to level the playing field and give new technologies a fighting chance against technologies that have been around 100 years," said Betsy Mullins, vice president of government and political affairs at TechNet, a public policy and lobbying group for the tech industry. "For many of them, that could be the difference in getting to the mass market."

Whether the industry gets what it wants remains to be seen. The House and Senate have passed energy bills with significant differences that must be reconciled in the weeks ahead. Two prominent senators are expected to introduce a major piece of climate change legislation this month, but even supporters say it could take years to pass.

Furthermore, Big Oil and Big Coal aren't sitting on the sidelines. They are resisting elements of the legislation that could cost them, such as the House bill's removal of $16 billion in tax breaks for oil companies. Legislation to encourage new energy technologies should not discourage oil producers from drilling more wells, said Barry Russell, president of the Independent Petroleum Association of America, which represents small oil-production companies.

"If you take that money out of their pockets, that's less money going into the ground," he said.

Some of the tech industry's goals may be easier to achieve than others. For example, both TechNet and the Greentech Innovation Network - a coalition of green tech businesses and venture capitalists - want some kind of market-based system for reducing greenhouse gas emissions. That would probably involve a "cap and trade" system, in which the government sets limits on overall emissions and then lets companies buy and sell credits to produce set amounts of greenhouse gases.

Sen. Joseph Lieberman, a Connecticut independent, and Sen. John Warner, R-Va., have proposed a cap-and-trade system and are soon expected to introduce detailed legislation to create it. A cap-and-trade system would, in effect, put a price on the carbon dioxide emissions that come from burning fossil fuels. Alternative fuels that produce fewer overall emissions during their production and use would benefit.

But crafting such a system is complex and could take years to accomplish, because virtually every industry in America will try to shape the outcome. Plus, President Bush has threatened to veto any government limit on emissions.

"I'm a little concerned because cap-and-trade affects so much of the economy that it will bring into Washington full-force every interest group in the country," said venture capitalist John Denniston, with the Greentech Innovation Network.

Denniston also supports a straight-ahead tax on carbon dioxide, an idea pitched by Rep. John Dingell, D-Mich. But many legislators want nothing to do with a new tax.

Both the Greentech Innovation Network and TechNet also support an element of the House energy bill that would force utilities to use more renewable power. At least 15 percent of all electricity sold nationwide by 2020 would have to come from renewable sources such as wind or solar power. California already has a more stringent version of the same policy, requiring utilities to reach 20 percent by 2010.

Like cap-and-trade, the renewable-energy standard would help guarantee a market for such green tech products as solar cells and wind turbines. That would be an immense help to young companies and their investors, ensuring that demand for their products wouldn't evaporate over time.

"You would have some kind of a floor so that people could anticipate what will be the minimum required," Mullins said. "We're talking about an industry where a startup can take 16 years to get to market and use a lot of capital."

Similarly, tech lobbyists support increasing the amount of renewable fuels - such as ethanol - that the country uses. The Senate energy bill sets a goal of 36 billion gallons per year by 2022.

The valley also wants an extension of a federal tax credit for facilities that produce renewable power. Congress has stepped in several times to extend the credit shortly before it was due to expire, but those extensions have typically been in one- or two-year increments. That greatly complicates the financing for companies building wind farms or large solar installations.

"The developer has to make decisions not knowing whether the tax incentives will be there or not," Denniston said. "It's really hamstrung renewable development."

E-mail David R. Baker at dbaker@sfchronicle.com.

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This article appeared on page D - 1 of the San Francisco Chronicle