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Will the S.F. Bay Area Lead the Climate Revolution?

During the 2015 U.N. Climate Change Conference in Paris, Bill Gates is unveiling his Energy Coalition backed by a number of Silicon Valley entrepreneurs.

(TNS) -- Some of Silicon Valley’s biggest names joined Microsoft founder Bill Gates Monday in pledging to pour their money into groundbreaking energy technologies that can fight global warming.

And the effort, while international, could be a boon for California.

Gates’ Breakthrough Energy Coalition, announced Monday at the climate talks in Paris, will fund promising technologies that most financiers consider too risky to touch.

Working in tandem with government-funded labs here and abroad, coalition members will try to take researchers’ ideas — in energy generation, storage and transportation — and bring them to the marketplace. Any idea that can help bring reliable and cheap energy to the world without adding greenhouse gases to the atmosphere is fair game.

“We need the basic research, but we need to pair that with the people who are willing to fund high-risk, breakthrough energy companies,” Gates said, in a video posted on his blog. “That formula will accelerate the innovation at the research level, accelerate the risk-taking, and that’s what gives us a chance of having a solution.”

Bay Area investors

And while the coalition’s initial 30 members come from around the world, a disproportionate number call the Bay Area home.

Mark Benioff, Reid Hoffman and Mark Zuckerberg — the founders of Salesforce, LinkedIn and Facebook, respectively — are members. Hewlett-Packard CEO and former Republican gubernatorial candidate Meg Whitman has joined as well. So have John Doerr and Vinod Khosla, two of the most prominent investors in clean-tech startups.

Climate activist and former hedge fund executive Tom Steyer, also on the list, said the group has not set a target for the amount of money it wants to invest. But he sees more investment as essential to speeding up the transition to a clean-energy economy.

Some places have already started the transition. California law, for example, mandates that 50 percent of the state’s electricity come from renewable sources by the end of 2030, leading to a boom in the construction of wind farms and large solar power plants. But nowhere is the change happening fast enough to put a serious dent in global warming, Steyer said.

“Speed of transformation is what this is all about,” Steyer said. “We’re kind of in a race, I think, between what’s happening in the natural world and the pace of new technologies. This is saying, ‘Let’s win this race.’”

Spending to double

The group has not yet decided how to vet promising technologies, Steyer said. But it is designed to work alongside another effort announced Monday called , in which the United States and 19 other countries will agree to double their spending on clean-energy research over the next five years.

California could benefit from the dual initiatives — in several ways.

The state’s universities have become hubs of clean-tech research. Their researchers and labs could see increased funding, assuming President Obama is able to make good on his Mission Innovation pledge. Considering the opposition to alternative-energy funding in Congress, that may be difficult.

The University of California system has joined Gates’ Breakthrough initiative as an investor. But the system also hosts three national energy laboratories, meaning it could benefit from increased government funding as well.

In addition, the Bay Area is home to a thriving clean-tech industry, including some companies that received funding from Obama’s green jobs push during the recession. Fremont solar manufacturer Solyndra famously went bankrupt after receiving federal stimulus funding, but Tesla Motors didn’t. Tesla now builds luxury electric cars about 3 miles from Solyndra’s former factory while leasing another building used by the failed solar startup. SolarCity, the fast-growing solar leasing company, rents another.

Tesla and SolarCity aren’t the kind of early-stage startup Gates’ coalition seeks to fund. But the Bay Area also teems with small companies trying to commercialize large-scale batteries — one of the technologies Gates singled out as a promising field for investment.

Venture capitalists, for a time, showed enthusiasm for alternative energy startups. But as Gates noted Monday, new energy technologies take a long time to penetrate the market and generate profits. They often don’t provide the quick exits that venture capitalists prefer. And many of them fail. Gates said the field needs patient investors who can afford to wait.

So while worldwide investment in clean energy has grown in recent years, venture capital funding for young companies has suffered. Bloomberg New Energy Finance last year tracked $310 billion in clean-energy investments worldwide, up 16 percent from 2013 and close to the record of $317.5 billion in 2011. But venture funding and private-equity investment only reached $4.8 billion last year, well short of the $12.3 billion record in 2008.

‘Fundamental shift’

“The huge shift, a pretty fundamental shift, was away from early-stage investment and into deployment,” said Ron Pernick, founder of the Clean Edge consultancy. “The focus has been on getting solar panels in the ground, putting wind farms in place.”

He sees the two new initiatives announced Monday — both public and private — potentially filling a significant hole.

“You need the early-stage innovation as much as the mass deployment,” Pernick said. “We really need an all-of-the-above strategy.”

©2015 the San Francisco Chronicle Distributed by Tribune Content Agency, LLC.