The New York Times Magazine has a long article on how uber-VC Kleiner Perkins is helping to jumpstart the clean-tech revolution. It is a must-read because what Kleiner and other VCs are doing — pushing a broad spectrum of carbon-mitigating technologies out of the lab and into the market — is some of the most important climate progress going on anywhere in the world.

Venture capital is now as important if not more important than U.S. government spending on clean-tech, as I’ve argued. VCs invested a stunning $1.75 billion in U.S. cleantech companies in just the third quarter — that is about twice what my old office at DOE spends in a whole year, and, thanks to the Bush administration, we wasted a large fraction of that on R&D into the “The car of the perpetual future.” How important is VC money?

A recent study by Global Insight noted that such businesses [that received VC funding] now account for nearly 18 percent of America’s gross domestic product and 9 percent of our private-sector employment. According to Josh Lerner of the Harvard Business School, “When you try to quantify it, a dollar of venture capital is somewhat equal to three or four dollars of corporate R&D.”

Kleiner Perkins was not the first VC in the clean energy space, but it was probably the key player in bringing serious money and credibility to VC investment in this area. Given their investor-enriching track record — Amazon, AOL, Compaq, Flextronics, Genentech, Lotus, LSI Logic, Macromedia, Netscape, Sun Microsystems, and, now most famously, Google (“in 1999, Kleiner Perkins and Sequoia Capital paid $25 million for 20 percent of Google,” a 1,000-to-1 return based on Google’s current market cap!) — when they bet the farm valley on a new area, people don’t just listen, they jump in.

The article explains how venture-capital works in this space — lingo alert, if you want to sound like you know what you’re talking about to VCs, you have to use the word “space” to describe an investment area. The piece focuses on John Doerr, “one of Kleiner’s managing partners and arguably the world’s most influential venture capitalist.” It also includes a brief interview with KP’s most famous partner, Al Gore.

Doerr and Kleiner have laid out a very serious strategy in this space, what they call “the map of grand challenges”:

This was a matrix of colored squares that itemized the firm’s progress in locating potential investments in about 40 different categories: water, transportation, energy efficiency, electricity generation, energy storage and the like. In the blank spots there were lists of “things that ought to be possible,” in Doerr’s words — ideas, in short, that might produce huge changes and, if Kleiner bought a stake, huge profits. Thus the grand map was a rough, imaginary outline of a clean-energy economy that didn’t really exist and perhaps wouldn’t in any meaningful way for decades. But it helped Kleiner understand what to look for.

And it has helped Doerr and Gore become more optimistic about the future:

The green-energy technologies Kleiner was investing in, Doerr continued, “won’t impact the problem at scale in the next five years, just because they have long development times associated with them. In the 5-to-15-year period of time, I think they’ll demonstrate, and clearly point the path to, lower costs than we would have otherwise imagined possible.”

And this is precisely the time-frame we need if we are to avert catastrophic climate outcomes. I very much like the fact that this article gets a central point missed by the “we must have a big government-funded Manhattan Project to generate breakthroughs to solve the climate problem” crowd:

It has become a kind of received wisdom that American and European laboratories have yet to come up with enough innovations to ease our dependence on fossil fuels, or that effective (and affordable) technological solutions to climate change are still many decades away. In truth, there have been scores of recent scientific developments in wind, solar, biofuels and energy efficiency that have not yet entered the market, in part because the private sector has deemed them risky investments in a world where gas, coal and electricity are cheap.

And in part they have not yet entered the market because there are market barriers, such as decades-old utility regulations that promote wasteful consumption over energy efficiency. The article makes clear that even the most super-optimistic and most super-successful clean-tech VCs in the world understand that you can’t possibly solve energy and climate problem without smarter and stronger government regulations.

The clean-tech space is tougher than the IT or internet space. Aside from needing a carbon price, the scale of the investment required is 10 times bigger:

For companies requiring industrial production — those making fuel cells or solar installations, for example — Doerr estimated it would take anywhere from $200 million to $500 million to get them ready for public offerings. “It took $25 million of venture capital to get Google into business,” he said.

The good news is that VCs are finally starting to put that kind of money into the technologies that can save the planet. As I have argued over and over again, the technologies we have right now or that will be commercialized within the next few years are all we need to make deep cuts on carbon emissions cost-effectively by mid-century.

What we lack is political leadership. In VC lingo, you only make money when you have an “exit” where the VC turns the equity it owns in a company into cash, typically through “an I.P.O. or sale of a start-up to a private firm.” Harvard’s Lerner notes “Exiting is ultimately the crucial thing.” So too with our current political “leadership” on climate and energy. Bush’s exiting is ultimately the crucial thing.

(In the interests of full disclosure: I consulted with Kleiner several years ago on a clean-tech investment; Doerr wrote a jacket quote for my book “The Hype about Hydrogen”; I own shares in two clean-tech start ups; and I expect to consult with VCs in the future. That is one reason I don’t typically talk about individual companies.)

This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.