When it comes to the nation's efforts to curb global warming, few places are more important than Sacramento; it is here that California's groundbreaking laws and regulations are written.

That, local business leaders say, gives the region a major boost in its effort to become a hub of the developing green economy. They are looking to green tech – also known as clean tech – as a way to strengthen and diversify Sacramento's job base.

"The hope is that in clean tech, companies will want to be located in Sacramento to be closer to the regulatory process," said Steven Currall, dean of the Graduate School of Management at the University of California, Davis.

In other ways, though, Sacramento seems an unlikely candidate to emerge a winner among the many regions trying to build a green-tech industry. Sacramento lags the Bay Area when it comes to raising money for new companies, and its previous efforts to establish itself in the high-tech and biotechnology industries faltered.

Still, business development officials say green-tech companies are showing unprecedented interest in opening shop in Sacramento, despite the bad economy.

"It's a wave of activity like we've never seen," said Bob Burris, deputy director of the Sacramento Area Trade and Commerce Organization, the region's nonprofit business recruiter.

Although there's no official method for counting green jobs, one leading advocacy group says Sacramento is doing well on that front. Palo Alto-based nonprofit Next 10 recently released a study concluding that Sacramento led all California regions in percentage growth of green jobs from 1995 to 2008, with an 87 percent jump from 7,019 to 13,102.

By Next 10's count, Sacramento has more green jobs per capita than the Bay Area, Los Angeles or San Diego.

UCD, SMUD have a role

The Sacramento region is now seeded with at least 70 clean-energy companies, many of them small startups. They are engaged in a variety of endeavors related to cutting energy use, harvesting energy from the sun or developing new sources of energy, such as plants or hydrogen fuel cells.

Whether these firms will eventually grow to hire thousands more people remains an unknown.

In addition to its role as the place where climate change rules are made, Sacramento has other advantages. UC Davis is an internationally known center for energy innovation, and the Sacramento Municipal Utility District recently landed $127 million in federal stimulus funds to build one of the nation's most advanced electricity networks.

The abundance of publicly owned buildings in Sacramento also creates a market for energy-efficient technologies. California state government, in particular, has been aggressive about requiring energy efficiency in new buildings, and Sacramento has one of the highest concentrations of buildings certified by the U.S. Green Building Council.

Not to mention that the region has plenty of sunshine, making it an ideal location for solar installations. Mike Anderson, vice president of marketing for Solar Power Inc., a Roseville solar company, called the Sacramento region "one of the bright spots on the planet."

It's not clear that those advantages will be enough to build a job-creating economic engine, however. The credit crunch and recession have made it tougher for any company to grow, and clean-tech firms face that same headwind. While environmentally friendly industry has been much touted as a potential bright spot in a largely gloomy economy, Sacramento has not been the only city to notice.

"Every single region of the state has a green jobs strategy," said Michael Bernick, a senior fellow at the Milken Institute and former chief of the state Employment Development Department. "There's probably something in there, but it's a strategy that everyone is pursuing."

Bay Area has venture cash

While Sacramento is a policy and regulatory powerhouse for the clean-tech sector, it doesn't have a reputation as an incubator for new companies. The consulting firm Clean Edge recently ranked Sacramento 10th in the nation for clean-tech job activity – partly on the strength of public-sector employment – but the area wasn't in the top 20 for venture capital investment.

"It's no secret that you're pretty far behind the Bay Area," which attracts more funding for emerging clean-tech companies than any region in the nation, said Ron Pernick, managing director at Clean Edge in Portland, Ore.

Still, Pernick said, simply being in California improves Sacramento's clean-tech job prospects, because the state is by far the national leader in the sector – thanks in large part to the aggressive renewable-energy, efficiency and greenhouse-gas policies coming out of the Capitol and state agencies.

Those policies help to ensure a demand for the products clean-tech companies deliver. Federal stimulus spending in the sector has further brightened prospects.

In Rancho Cordova, Residential Control Systems Inc., which makes smart-grid-ready thermostats and other efficiency-related products, had to lay off some employees this year but expects to be back to full staffing this spring. By next summer, when economic stimulus funds for smart grid and government energy efficiency projects finally come through, company President Michael Kuhlmann expects to be adding staff to keep up with orders.

"We feel good. We just hope we don't get drowned" by the wave of business, Kuhlmann said.

Quantum Energy Solutions, an energy-efficiency retrofitter in Sacramento, is seeing orders surge. The company recently won a $100,000 contract from Holiday Inn to install ultra-efficient LED lighting.

President Jim Collins said he expects business to continue to improve as local governments begin spending stimulus dollars allocated to energy-efficiency measures.

In Davis, startup Octus Energy is hoping to build a business by cutting large buildings' energy bills using a bundle of efficiency technologies, many developed at UC Davis. San Francisco-based ZETA Communities, meanwhile, has set up shop in a former hangar at McClellan Park, where its crew is turning out modular buildings that use no more energy than they produce.

Solar, ethanol setbacks

At this point, most clean-tech companies in Sacramento are small startups. Even with the prospect of federal stimulus dollars, lack of capital limits growth in the sector.

Collins of Quantum Energy said the credit crunch continues to crimp his 12-employee company's prospects.

"To be honest, the only thing keeping us from broadening our horizons is finding capital," Collins said.

Just over a year ago, crews at McClellan Park working for OptiSolar Inc. were building what was supposed to become the continent's biggest solar-panel factory. By March, though, the Hayward-based company had run out of money, sold off its business operations and laid off more than 100 Sacramento-based construction workers. OptiSolar's production lines were bought in July by another solar firm with much more modest plans.

Sacramento's Pacific Ethanol was a biofuels pioneer, growing to become the biggest ethanol maker on the West Coast. But in May, the company put its four production plants under Chapter 11 bankruptcy protection, the result of low fuel prices and the high cost of corn, ethanol's main ingredient. The company has recently shown signs that it is reviving, though, and has reopened one of its three shuttered plants.

While clean technology is often touted as a creator of new manufacturing and other blue-collar jobs for a country that has seen that sector shrink, there's not yet much evidence of significant growth of that type in Sacramento. Solar Power, for instance, is based in Roseville but makes its panels at a factory in China. McClellan-based Renewable Energy Institute International, which recently won a $20 million federal grant, does its research and development locally, but its biorefineries are likely to be built in Ohio.

Experts say there's no simple strategy for developing the region's clean-tech potential, and that building a substantial economic presence in the sector will take a sustained effort from everyone from the business community to local government.

Currall, the UC Davis business school dean, said the region should start by focusing on the green-tech industry and trying bit by bit to brand itself as a hub, much as Houston did with energy.

"Let's tell the story and see if we can build a brand," Currall said. "Just start flying the flag."

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Call The Bee's Jim Downing, (916) 321-1065.