If Sen. Barack Obama gets his way, the U.S. government will become a major investor in the cleantech industry.

As part of his New Hampshire speech outlining his energy policy Tuesday, the presidential candidate and Illinois Democrat said he would launch a venture-capital fund to invest $10 billion annually in clean-energy technologies for five years if he's elected.

"This venture-capital fund will get new technologies from the lab to the marketplace so that in the next few years, the American economy can benefit from America's innovations," he said.

Environmentalists responded with cheers, eager for more investment in environmentally friendly technologies that could create more sustainable energy sources, and cut down on carbon-dioxide emissions that cause global warming. But some of the folks currently funding those technologies gave the proposal less glowing reviews.

"Markets support the industry," said Jeff Siegel, a renewable-energy analyst at Green Chip Stocks. "The government putting money in is not going to fix the problem."

Modeled on the CIA's In-Q-Tel venture-capital fund, Obama's fund would seek to bring new technologies out of what he calls "The Valley of Death" between research and commercial deployment. That's a place where, he says, too often good ideas go to die. Obama wants the money to go toward building first-of-their-kind commercial-scale facilities for clean energy.

But that's an area where venture capitalists already have been playing, at least for some technologies.

Take biofuels, for example. A number of biofuels startups have received venture capital, or a mix of venture capital and project financing, to build their first plants. Amyris Biotechnologies, Endicott Biofuels and Imperium Renewables raised money for facilities, among other examples (see Are Biofuels Pushing VCs Into A New Role?, Biofuels Get Financing Downpour, Top Deals).

So perhaps it's no wonder that some investors aren't exactly thrilled by the idea of an encroaching government VC with such deep pockets.

Obama is hardly alone in proposing major governmental support to the cleantech industry. While other Democratic candidates' plans may not compete as directly with venture capital -- instead coming in the form of more traditional government grants - Sen. John Edwards has already proposed a $13-billion-a-year fund for new energy, and New Mexico Gov. Bill Richardson, a former U.S. energy secretary, has called for a trust fund of several billion dollars per year.

New York Sen. Hillary Clinton hasn't revealed her complete energy policy yet, but has proposed $50 billion for new energy research.

Local entities also have started investing in cleantech through far more modest funds. California, for example, set up the California Clean Energy Fund, in which venture-capital firms Nth Power, Draper Fisher Jurvetson and VantagePoint Venture Partners each are investing $8.5 million in clean-energy companies on behalf of the state.

Cleantech investors say they support many components of plans that have come out of the Democratic camp - including reducing subsidies for oil and coal, making alternative fuel tax credits permanent, creating cap-and-trade systems for carbon emissions and pushing up demand for alternative energy sources that would diversify the electrical grid.

But a handful of investors this week expressed some skepticism regarding government's ability to effectively invest in cleantech. They said the funding process could become too political, with too many strings attached, or that there may simply not be enough of a need for the infusion.

Investors say that in the last few years, as the Bush administration failed to support clean energy, venture capitalists and private equity firms have more than picked up the slack. Some believe a funding glut is emerging, and that an additional $10 billion per year or more from government could be difficult to absorb.

"There's a lot of private investment capital already focused on investing in tech startups in this arena," said @Ventures principal Matt Horton. "Governmental support may be more useful in creating markets and demands for technology provided by our companies."

In 2006, private equity investors and venture capitalists poured $18.1 billion into clean energy globally, a 67 percent increase over 2005, according to a New Energy Finance report released two months ago. And the flurry shows no signs of letting up: In the last few weeks alone, venture-capital firms have raised around $1 billion in new funding for the sector.

With all the cash floating around, demand for good investment opportunities is outpacing supply, say analysts. According to New Energy Finance, investors ended the year with more than 25 percent of their funds still unspent.

Based in London, New Energy Finance director Michael Liebreich has watched the United Kingdom and the European Union establish significant cleantech-related funds, and observes that government funding sometimes can have the unintended effect of crowding out venture capital.

But Liebreich also believes that governmental support can be helpful when it focuses significant capital on projects that are risky or large-scale enough to deter other investors. He pointed, for example, to the European Marine Energy Centre, a large tidal-energy project in Scotland that has been granted £15 million ($30.6 million) in public funding. Tidal energy has not yet proven that it can become a commercially viable technology.

"In the case of EMEC, no individual or company is going to do this, so that's the sort of thing government can be useful in," Liebreich said.

SJF Ventures managing director David Kirkpatrick agreed that the government would do well to stay away from areas that are particularly in vogue with the venture-capital community - such as thin-film solar and cellulosic ethanol - and stick to investing in technologies that aren't gaining as much favor.

"If the government is willing to take on more risk of failure than investors, and do it in the public interest, then all will be to the good," Kirkpatrick said.