America is confronting three interrelated crises: an economic crisis, a climate crisis and an energy security crisis. The country’s best response to all three is a bold, coor­dinated campaign of investment and incentives to accelerate green innovation. Doing so will ensure that the U.S. becomes the worldwide winner in the next great global industry: green technologies.

Let me be blunt: we have not been doing enough. We must act now, with speed and scale. On speed, scientists say the next three to five years will determine our chances to avoid catastrophic, irreversible climate change. On scale, science says we must cut global carbon dioxide (CO2) emissions to less than half of today’s levels.

Some people say we need an Apollo program or Manhattan Project. But those were merely multibillion-dollar efforts in single government agencies. They fail to convey the scale of the challenge, which is to reindustrialize every city, state and country.

Bet on Entrepreneurs
Green technology has incredible potential. My firm alone has invested in 45 innovative ventures that can provide a greener future. Here are three examples:

Ausra, Inc., builds advanced solar-thermal technology that produces utility-scale electricity. We found this tiny start-up in Australia and helped it move to Palo Alto, Calif. And we helped hire additional world-class engineers and managers. Ausra now has a long-term contract with Pacific Gas & Electric to supply almost 200 megawatts of power. Its costs are the cheapest of any utility-scale solar technology, and with further advances we believe it will compete with coal-fired plants. Over several years Ausra plans to build two gigawatts of capacity, generating 4,000 construction jobs, 1,000 operational jobs and clean power for more than 300,000 American homes, while avoiding 2.5 million tons of emissions annually.

The second example involves a unified, national smart grid. Silver Spring Networks in Redwood City, Calif., works with utilities to install digital networks that allow consumers and utilities to control electricity usage, reducing waste—and emissions—while saving money. In just two years Silver Spring has networked more than 300,000 customers and signed contracts to network 10 million homes. The potential savings are 100 million tons of CO2 and $16 billion. California’s experience suggests that a nationwide smart grid could create 500,000 construction jobs and 280,000 permanent jobs.

The third example is an advanced battery venture still in “stealth mode.” The company’s breakthrough creates stable, durable lithium-ion batteries with greater storage capacity. The result will be electric vehicles that can travel up to three times as far—more than 100 miles—before recharging. Again, we found this team outside the U.S., but we persuaded them to build manufacturing plants that will create thousands of jobs in the Midwest. The company will ship batteries at the end of this year. This technology could revitalize our automotive industry and preserve and create many jobs.

Notice the trend. Two of these ventures came from outside the U.S. Of today’s top 30 solar, wind and advanced battery companies, American firms hold only six spots. That should worry us. In the race to save the planet, we are not winning.

But one lesson I’ve learned is to never underestimate the power of entrepreneurs. They do more than anyone thinks is possible with less than anyone thinks possible. Entrepreneurs are creating advanced solar-photovoltaic cells that could beat today’s electricity costs without subsidies. They are designing wind turbines that generate electricity more cheaply than a new coal-fired power plant. They are converting millions of tons of municipal waste into clean electricity and fertilizer. And they are making next-generation biofuels from renewable, cellulosic sources rather than competing for foodstuffs or importing overseas oil.

Pass Vital Policies
Not all these innovators will succeed. But imagine if half of our cars were powered by electricity instead of imported gasoline. Or that half of our homes and businesses were powered by sunlight and wind instead of natural gas and coal. Entrepreneurs are working hard, but entrepreneurs and venture capitalists cannot do it alone. We need five vital policies that will drive investment, innovation and jobs in green technology.

  1. A unified, national smart grid. Now is the time to build the infrastructure for wide-scale deployment of our renewable energy sources. We must be able to move, monitor and manage our electricity usage effectively.
  2. A price on carbon and a cap on carbon emissions. We need to account for the true costs of emitting greenhouse gases. We cannot continue dumping 70 million tons of CO2 into our atmosphere every day as if it is a free, open sewer. A price on carbon will propel carbonless innovations such as solar cells, wind turbines and countless others to market, at scale, more quickly.
  3. A national renewable portfolio standard. Standards imposed by states have stimulated $65 billion in expenditures. A nationwide renewable portfolio standard will allow faster deployment of energy innovations, with more scale and more jobs. The U.S. Department of Energy projects that a 20 percent renewable portfolio standard by 2030 would create 500,000 jobs, save consumers $128 billion through lower natural gas prices, and cut the same amount of greenhouse gas emissions as taking 140 million automobiles off the road.
  4. Utility regulations and incentives to encourage efficiency. We need to unleash utilities so they can invest in efficiency gains. Over 20 years efficiency programs run by California’s utilities have saved $56 billion and created 1.5 million jobs. Get this single federal policy right, and it will create the biggest, fastest and most energy-efficient engine for new jobs: for contractors, builders, engineers, project managers and more.
  5. Serious funding for R&D&D (deployment) at scale. We need more federal funding for basic research. Today, with few exceptions, the Department of Energy spends less than $1 billion for all renewable energy research. But we also need funding for deployment—the second D in R&D&D. America needs federal grants and loan guarantees to show that these technologies will work on a large scale. We should streamline the process, allow riskier bets and help to bring new technologies to market. Tax incentives for renewables and efficiency are another must. Let’s make tax incentives flexible enough to work in our current economy and be fully refundable, to encourage companies to invest in expensive scaling risks.

Energy is a $6-trillion market, with four billion electricity users. It is the mother of all markets, perhaps the largest economic opportunity of the 21st century. With policy leadership, America can create millions of new green technology jobs and industries and repower the country’s economy. By acting quickly and investing in technologies and entrepreneurs to build American leadership in the New Green Economy, we have a unique opportunity to simultaneously address our economic, climate and energy security crises.