“I love the Bay Area. And I swear that nothing will get me to move away,”

So said investor Vinod Khosla at an event today in San Francisco that was, ostensibly, focused on helping make the local area “the center of the world for clean technology,” as Bay Area Council President Jim Wunderman, organizer of the event, put it.

Yet while 200 people were gathered to celebrate the innovation, investors, incentives and other factors that have contributed to the area’s successes as a cleantech spawning ground, Khosla raised concerns and poked at some common California cleantech causes célèbre.

For instance, while the San Francisco and Silicon Valley areas reveled in their cleantech cachet, Khosla said some of his portfolio companies, for instance, Caltech biofuels spinout Gevo, were quietly considering moving out of the state.

“Because of the cost, they’re actually wondering whether they should be leaving California or not. Given some of the regulations and how long it takes to build pilot facilities, they think they can move much faster in Colorado.”

Likewise was Khosla ethanol investment Cilion considering moving on, he said.

“This is a company building corn ethanol plants in the central valley. The permitting cycles are so long, they’re starting to look out of the state and out of the country.”

Local permitting cycles are so arduous, he said, that California solar companies like Khosla investment Ausra (formerly Australian-based) have started looking for new contracts outside the state because of the long permitting cycles—even though local utilities like PG&E continue to actively seek renewable energy providers.

“During the power crisis of 2001-2002, after the Enron debacle, we were approving power plants in 90 days. The CPUC (California Public Utilities Commission) had a mandate to approve them. Why can’t we approve solar thermal plants in 180 days? [They’ve got] almost no environmental impacts. We should mandate that. Reduce the permitting cycles and these companies stay in California.”

Concerns about a California cleantech exodus were echoed by others in the audience. An economic development officer for a large area company, who requested to Cleantech.com that neither he nor his employer be identified, suggested he’s seeing cleantech and other employers “streaming out” of California.

“Oregon and New Mexico, in particular, have been offering companies great incentives. Employers are streaming out, being driven by high energy costs and taxes,” he said. “California really needs to figure out how to incent cleantech companies to remain here.”

California should follow Massachusetts’ lead in encouraging cellulosic ethanol, Khosla said.

“We in California misguidedly offer a ten cent a gallon tax incentive for ethanol. But we offer it for all ethanol. It costs the state about 90 million dollars. What does it do? Nothing. For less money than that, they could create a much larger incentive. I’ve asked Massachusetts’ governor to call our governor to explain this. It’s hard to keep cellulosic ethanol companies in California because of the permitting cycles and no incentives.”

Other cellulosic and other next-gen fuel Khosla investments, in addition to those above, include Range Fuels, Mascoma, Hawaii BioEnergy, LS9, AltraBioFuels, Amyris Biotechnologies, Verenium (formerly Celunol) and others.

Silicon Valley has done a good job of leveraging its expertise with the silicon in its namesake into solar. But it wasn’t leveraging its strengths on all fronts, Kholsa pointed out. While the San Francisco Bay Area has a historical strength in biotechnology, it had failed to translate that strength into bioplastics, for instance.

“Despite our best efforts, all the bioplastics companies want to migrate to Minneapolis for one reason or another. Some of the agricultural companies like Cargill and ADM are in the Midwest, so the scientists are in the Midwest. Every time you look for talent, people tend to be available in Minneapolis, or Michigan. It’s a major area we should have an initiative on in the Bay Area.”

Khosla, formerly a partner with Kleiner Perkins Kaufield and Byers, is principal of Khosla Ventures, which has invested widely across next generation fuels, energy efficiency, solar and other cleantech sectors.

He spoke today at the Cleantech Crossroads event organized by the Bay Area Council, a local advocacy group of leading employers in the San Francisco area, founded in 1945.

SPECIAL BONUS – more Khosla!

Love him, or not, nobody questions Vinod Khosla’s flair for soundbites.

Witness, from today (and watch for words like “stupid” and “silly”):

“I personally believe in two or three years, the production cost of cellulosic ethanol will be around a-buck-twenty-five a gallon, and in within ten years you’ll see a-dollar-ninety-nine a gallon ethanol in every Wal-Mart in America.”

“I would submit that some of the smaller photovoltaic efforts in California are relatively poor use of state funds. I saw an article this morning about putting photovoltaics on the roofs of low income housing. It’s a stupid idea to try and sell forty-cent power to people who can’t afford homes. It’s a bad idea.”

“Anybody who tells you hybrids are [the solution] to carbon emissions, that’s a dream. It’s not going to happen. It’s way too expensive for the average person in Mississippi to adopt. It is not a climate change solution. It’s a good investment – we make investments in hybrid technologies. But it doesn’t impact carbon emissions. Nor will it be adopted because of its price points in India and China.”

“In California, we seem to be tied to what I consider silly ideas like hydrogen and trying to push hybrids. Which fundamentally won’t succeed, not because they’re bad technologies, but they’re uneconomic technologies. Nobody’s going to pay at the large scale $20,000 extra for a plug-in car. Battery technology is not moving fast enough, or declining rapidly enough in cost. Internal combustion engines can achieve that for far lower cost.”

“I like to say the environmental community has done more damage when it comes to carbon emissions than anybody I know. We have hundreds if not thousands more coal plants on this planet because the environmental community resisted nuclear. I’m not a big fan of nuclear, but if I have to pick between a coal plant and a nuclear plant, I’ll pick a nuclear plant any day of the week. Far safer than a coal plant.”

“I’m a pragmentalist, not an environmentalist. We have to do the things that make the most difference, not the most ideal solutions.”