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Silicon Valley's next big thing: 'clean tech'

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One factor driving clean energy's expansion are laws in nearly two dozen states that mandate that a portion of electricity come from renewable sources. California has gone further with the passage last year of a law that caps greenhouse gas emissions. Experts see similar federal regulation around the corner, creating an enormous demand for clean energy.

Another factor: rising hopes that clean energy can one day compete with fossil fuels. Already, the cost gap is narrowing. If entrepreneurs can close it, then they will be competing in an enormous market.

"The industries they are attacking are so immense. We import tens of billions of dollars of gasoline each year," says Ron Pernick, coauthor of the forthcoming book, "The Clean Tech Revolution." [Editor's note: The original version had the incorrect dollar amount of gasoline imports.]

That huge market potential is luring big players such as General Electric and Sharp into the sector. Citigroup announced this week a $50 billion investment in clean tech. British Petroleum is investing $400 million in biofuel research at the University of California at Berkeley.

Startups are cropping up as well. Mr. Pernick's market research firm, Clean Edge, now tracks 45 clean-energy companies listed on US stock exchanges. The index is up 12 percent since February. Just three years ago, Pernick says, it would have been impossible to find enough companies to track.

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