handshake in front of green globeFortune Magazine‘s annual Brainstorm Green confab in sybaritic Southern California locales brings together Fortune 500 types (naturally), green tech entrepreneurs, venture capitalists, and environmentalists. As such it’s a barometer of sorts for the state of green in the Green State.

At last year’s conference, the chatter was all about tech and the latest cool green innovations. But at the event that concluded this week on Earth Day, the suits, scientists, and activists sounded more like a bunch of Washington wonks than Silicon Valley geeks. In the Obama era, innovative public policy will drive green tech as much as the latest high-tech solar breakthrough. (Disclosure: I’m a Fortune contributing editor and helped organize Brainstorm Green.)

When Ford Executive Chairman Bill Ford took the stage, the auto industry scion and early electric-car enthusiast wanted to talk taxes. Gas taxes. He’s in favor of ‘em. “When gasoline went to $3.50, we saw a sea change in customer behavior,” he said. “Now people are turning away from more fuel-efficient vehicles and taking the bigger vehicles.”

In other words, Ford doesn’t want customers ditching his latest alt-energy car for a monster SUV because the Saudis send gasoline prices plummeting. “I’ve been talking about the need for a gas tax,” said Ford. “We need a much more stable planning horizon. That’s not just true for gasoline but for any fuel we use.”

“We can’t go on with fossil-fuel burning the way we are now,” he added. “We can’t go on with cheap gas forever.”

If the prospect of a Detroit auto chieftain calling on the government to send to the scrap heap its most profitable products might have caused conference-goers to fall out of their Aeron chairs a year to two ago, it was par for the course this week.

Listen to Peter Darbee, CEO of San Francisco-based PG&E — one of the United States’ largest utilities — on the bottlenecks to building a green energy transmission grid. “If you look at what happened in World War II, we transformed an economy in two years from a civilian peacetime economy to a wartime,” he said. “We need to do that in California and across the nation … So government needs to stop getting in the way and start getting in there constructively and making these projects work if we are going to meet the challenge of climate change.”

(Which is not to say that PG&E is not putting itself on the outer limits green tech – last week it signed a deal for the world’s first space-based solar power plant.)

At last year’s Brainstorm Green, Wilber James, a VC with Rockport Capital Partners, extolled the technological virtues of the Think Global, the Norwegian electric carmaker in whose North American operation his firm had taken a large stake. When I ran into him this week, he was ranting about Norwegian industrial policy, or the lack thereof. The global financial crisis has idled Think’s auto factory outside Oslo, and Norway’s government has refused to give the company a loan guarantee to restart production of its City electric car.

“The Norwegian government has made trillions from North Sea oil and they can’t give Think $10 million!” James fumed, noting approvingly that three U.S. states are putting tax breaks and cash on the table in a bid to become the site of Think North America’s first U.S. factory.

Van Jones, the newly appointed special green jobs advisor to President Obama, spoke of a decidedly low-tech approach to generating environmentally friendly employment. “We’re not talking about sexy, Buck Rogers, space-age stuff most of the time,” he told the audience. “We’re talking about caulking guns most of the time.”

The three words that were on everyone’s lips this week were “cap and trade,” and throughout the conference you could overhear solar startup founders, wind farmers, and utility executives debating the intricacies of auctioning carbon permits.

Still, technological innovation didn’t entirely take a backseat to policy pronouncements. Bob Gates, an executive with California wind-turbine maker Clipper Windpower, said the next frontier in wind won’t just be massive offshore wind farms but a new generation of highly efficient smaller turbines that can be placed near cities as to avoid having to build massive new transmission projects.

And Shai Agassi, CEO of Silicon Valley electric-vehicle infrastructure company Better Place, unveiled the first electric version of the corner gas station (it’ll be demo’d next month in Japan). Drive your EV into the $500,000 battery-swapping station and in 40 seconds a robot positioned under the car unlatches the battery compartment door, removes the drained battery, and installs a fresh one, soothing drivers’ “range anxiety” that they’ll be stuck in the boonies with a dead battery.

The confab ended with a speech by former President Bill Clinton — looking tan, rested, and ready — who spent most of an hour talking policy, but ended with a plea to just do it when it comes to fighting climate change.

“If you prove the economics, you can completely swamp the skeptics.”