Silicon Valley is no stranger to innovating new technology. And if investors tend to go where the talent is, and talent goes where the money is, it's safe to say that Silicon Valley is trying hard to re-invent itself as the world's eco-innovation headquarters.

Venture capitalists and entrepreneurs, not to mention older, more established companies, are jumping on board the Green gravy train in a big way. Erik Straser is a venture capitalist at Mohr Davidow Ventures, and one of the leading investors in so-called clean technologies. He says, "What we saw early on is lots of activities in the solar area, and now it has broadened out to include the biofuel area, clean coal, water technology. Transportation is particularly exciting right now."

In fact, new, clean, green companies are sprouting up like organic tech mushrooms all over Silicon Valley. I've mentioned Nanosolar in previous posts; but there's also Serious Materials, banking more than $50 million in venture capital so far, developing a new kind of dry-wall that significantly reduces Greenhouse emissions during the production process. And since dry-wall is one of the construction industry's top pollution makers, behind steel and cement, an innovation like this one could be extremely important.

And investors are getting the message. Venture capital in this area is soaring; from $168 million in just 64 companies back in 1990, to nearly $2 billion so far this year in 147 companies. The investment pace has doubled just since 2005.

It's not just technological innovation, either. Big companies are changing the way they do business. Google

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[GOOG  Loading...      ()   ]  gave employees $5,000 if they bought a new Prius. The company offers easy re-charge stations throughout its campus, and even installed the largest commercial solar project ever. Says Robyn Beavers of Google's environmental program: "We are estimating that these solar panels will offset 30% of our peak electricity here in Mountain View."

Yahoo

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[YHOO  Loading...      ()   ] uses local farmers for its mostly organic fruits and veggies in its cafeteria so far-away companies don't have to burn a lot of fuel shipping product. Yahoo says it's all about reducing its "carbon footprint."  "Effectively, what that's like, us going carbon-neutral, is like taking 35,000 cars off the road every year," says Chris Page, the company's climate and energy director.

Cypress Semiconductor

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[CY  Loading...      ()   ] is also enjoying the fruits of a green strategy. The company spun off its SunPower division into its own, standalone, publicly traded company. This was a $24 stock in January; today it was as high as $150 a share. Its $12 billion market cap is roughly double Cypress' $5.87 billion.

Network Appliance switched to low-energy servers and now generates its own power. Same goes for the now, aptly named Sun Microsystems

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[SUNW  Loading...      ()   ] . Says Greg Papadopoulis, the company's chief technology officer: "We view eco and eco responsibility to be both ecology as well as economics. The happy coincidence here is you can satisfy both."

Which hadn't been possible before. Big money; ecological, economical, good for the environment and now, finally, good for investors too. With Silicon Valley trying to establish itself as the leading region for the next big technology wave.

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