Let me state my bias upfront: I’m am admirer of GE and its chief executive, Jeff Immelt, and the company’s ecomagination initiative.

GE and Walmart are, as I have written, the most influential companies in America, and it’s great that they are serious about becoming more sustainable, and working with their customers and suppliers to do so as well.

But I can’t help but be struck by the extent to which GE’s clean energy businesses depend on federal and state tax and regulatory policy, along with grants and loans from the government.

Wind energy, solar energy, nuclear power, cleaner coal, smart grid initiatives, energy efficient appliances, compact fluorescent light bulbs -- all of these either benefit from current policy, get stimulus money or Department of Energy grants, stand to benefit if the climate-change legislation strongly supported by GE is enacted into law, or all of the above.

This is fairly obvious, admittedly, to anyone paying attention to the energy and climate debate, but it was brought home to me vividly last week, at a GE Ecomagination Forum that focused on GE Capital’s venture investments in cleantech startups.

You can read more about GE’s venture business a column I wrote for fortune.com, called GE Brings Good Things to Startups, and in an interview and podcast with Kevin Skillern, the managing director of venture capital for GE Energy Financial Services, which are available at Greenbiz.com.

Since 2006, GE’s venture fund has smartly  invested about $160 million in 20 startups in such businesses as wind and solar power, batteries, energy efficiency, smart grid and fossil fuels.

Of GE’s portfolio companies, the star performer and recipient of GE’s biggest investment -- about $69 million -- is a company called A123 Systems that makes advanced lithium ion batteries and appears to have a very promising future.

A123 makes batteries for the transportation, utility and consumer markets, for such customers as Daimler, Chrysler, Volvo, Better Place/Renault, Black & Decker, AES and Procter & Gamble’s Duracell unit. Investors alongside GE, which is A123’s biggest shareholder, include Sequioa Capital, ConocoPhillips, AES, Motorola and P&G. Google founders Larry Page and Sergey Brin drive electric cars powered by A123 batteries, as does Tom Hanks. Not a bad list of endorsements.

Here’s the thing, though. A123 has been given more than $600 million in grants, loans or tax credits  by the federal and state government to build a new plant in Michigan. They include a $249 million grant from the DOE’s Electric Drive Vehicle Battery and Component Manufacturing Initiative, another  $100 million in refundable tax credits from the state, and $27.5 million more from the U.S. Advanced Battery Consortium. Separately, Nissan, an A123 customers, got a $1.6 billion loan to retool a factory to make electric cars and batteries. The climate bill will provide another boost to electric cars. And, according to the company:

A123 was born out of the research labs of the Massachusetts Institute of Technology and was funded initially with a $100,000 grant from the U.S. Department of Energy in 2001.

In other words, the taxpayer investment in A123 probably exceeds GE’s by a hefty margin.

Southwest Windpower, another GE portfolio company, also benefits greatly from government subsidies, as its CEO, Frank Greco, explained last week.

Southwest is the world’s leading producer of  small-scale wind turbines, which it manufactures at factories in Flagstaff, Arizona, and in a joint venture in China. It’s got leading-edge technology and lots of growth potential.

Southwest’s  grid-connected Skystream 2.7 turbine can generate power at rates comparable to what some homeowners and businesses pay for retail electricity -- after you factor in a federal tax credit and, in California and some other states, generous, state rebates.

In fact, the subsidies can bring the $15,000 or so cost of a turbine down to about $5,000, in a best-case scenario -- best case, that is, for the owner of the turbine, the company and its investors, including GE.

The story is much the same for Soliant Energy, another company showcased by GE: Very promising technology, impressive management, heavy reliance on government policy.

I asked Skillern, who manages GE’s  venture investments in energy, whether he was worried that the portfolio carried too much political risk. What if, unlikely as it seems, a free-market administration came to power in Washington? He acknowledged the issue but said he thought all of the companies could survive and even thrive without government backing, but that the government support would speed up deployment of their technologies.

In any event, the tax dollars backing GE’s venture portfolio may turn out to be well spent. If A123, Southwest Windpower and Soliant all do well, they will create thousands of “green jobs” and help the world deal with the climate crisis thereby delivering benefits to all of us. That’s the logic behind the government support. What’s more, we all pay the hidden costs of burning fossil fuels, as my friend Matt Wald reported in the New York Times:

Burning fossil fuels costs the United States about $120 billion a year in health costs, mostly because of thousands of premature deaths from air pollution, the National Academy of Sciences reported in a study issued Monday

Goodness knows that the oil and gas industries get massive government subsidies as well.

None of this began with the Obama administration, it must be said. The Bush crew, remember, rescued Wall Street and bailed out GM and Chrysler. Increasingly, we’re seeing the government is trying to manage not just the broad economy, but industries and companies as well. Health care, in some form or another, may be next. How this experiment in industrial policy will turn out is anybody’s guess.

But it’s no wonder corporate CEOs, including GE’s Immelt, find themselves spending so much time these days in Washington.

GreenBiz.com Senior Writer Marc Gunther maintains a blog a MarcGunther.com.


Image courtesy of GE.