Gates' Cascade Investments this month intends to buy a stake in Pacific Ethanol of California, which says it will become the largest seller of corn-based fuel additives on the US West Coast.

Vinod Khosla, founder of Sun Microsystems, the world's fourth-largest maker of computer servers for networks, is financing ethanol research.

And Robert Metcalfe, co-founder of 3Com of Massachusetts, who helped invent Ethernet, the protocol for connecting computers, is testing a system to convert smokestack emissions into power-plant fuels.

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"We're finally at a point where some of the alternate energy sources that are more environmentally friendly are worth taking a look at," said David Shaw, whose DE Shaw hedge fund is planning to increase its stake in windmills. "We're interested in cleaning up the environment at the same time as we make money for investors."

Record oil prices are accelerating the push for new forms of energy. Demand for fuels made from corn, sugar and soybeans will quadruple in the next three decades, a period when oil use will increase by less than 60 percent, the International Energy Agency estimates.

Diapason Commodities Management, a Swiss-based fund manager, plans to raise US$500 million for a biofuels fund the company started this month. The firm was set up in 2003 by James Rogers, who co-founded the Quantum hedge fund with George Soros in 1970.

Shares of Pacific Ethanol have risen 20-fold in two years, valuing the company at US$894 million, and stock in Archer Daniels Midland of Illinois, the world's biggest ethanol maker, is up 49 percent this year.

The average ethanol price in the US has almost doubled to US$2.44 a gallon in the past year, while wholesale gasoline prices have gained 39 percent.

"It's great when you can put that crop into your gas tank," said Hugh Grant, chief executive officer of Monsanto, the world's biggest developer of genetically modified seeds. "With US$70 oil, bio-ethanol is here to stay."

President George W Bush said in his January State of the Union address that ethanol could be a practical alternative within six years, and experts and investors agree.

"Ethanol is a huge market," Khosla said. "I think it can replace all of our petroleum needs, or at least a majority. That creates a very creates a big opportunity that's very susceptible to technology."

Khosla Ventures, backed by his own money, plans to invest about 40 percent of its capital in alternative energy, though he declined to detail how much he is investing or the size of his fund.

Khosla is co-chairing a proposed ballot initiative in California that would tax oil extraction and use some of the proceeds for alternate energy.

"Energy has got to be one of the top five problems the world faces, and it's been frustrating to watch activists and politicians fail to solve the problem," said Metcalfe, now a general partner of Polaris Venture in Massachusetts. "It's time for the entrepreneurs and scientists to give it a try."

Polaris is dedicating part of its newest fund's US$1 billion to clean-energy technology. It said on April 11 it had made a US$6.8 million investment in GreenFuel Technologies, which is developing ways to feed carbon dioxide emissions to algae that can then be converted into fuels.

The investment is Polaris' first in clean fuels.

"The markets for the products are huge," said Metcalfe, who led the Xerox research team that invented Ethernet, a personal computer networking standard, in 1973.

"If you can get it right it's really a market that's infinite. We're hopeful."

Investors have been trying to find alternates to coal, oil and natural gas for years without much luck.

In the past 30 years, US$27.4 billion has been spent on renewable research and development budgets, according to the International Energy Agency in Paris.

So far, renewable energy accounts for just 5.5 percent of all primary fuel used by the IEA's 26-member nations, with hydropower accounting for 2 percent, combustibles such as ethanol 2.9 percent and wind 0.6 percent.

Oil and gas companies will spend an estimated US$238 billion on exploration and production this year alone, up 15 percent from 2005, according to a Lehman Brothers survey of 325 companies.

The American Petroleum Industry said its members have sunk US$1.2 billion into non-hydrocarbon technology in the five years from 2000 to 2005, or about 8 percent of the total spent in the US.

James Clark, founder of Netscape Communications and Silicon Graphics, said the US government, not venture capitalists, should be spending more to develop new energy sources.

"Give me US$35 billion and 10 years," Clark said March 21 at Stanford University, where he used to be an associate professor.

"I will guarantee that we have some viable alternatives. That seems a small expenditure to guarantee a future source of energy." BLOOMBERG