Over the past few years, numerous energy watchers and politicos have declared that the U.S. government needs to launch a “Manhattan Project” or “Apollo Project” to provide us with the breakthrough energy technologies that will allow us to transition away from fossil fuels and toward something cleaner/cheaper/more convenient. Doing so, the proponents claim, will create millions of “green collar” jobs, revitalize the economy, and put America back on track as a manufacturer and technology leader.

Whether those claims prove true or not remains to be seen. But here’s the good news: as a result of higher energy prices, the Manhattan Project is underway. Here’s more good news: huge investments in renewable energy technologies are being made without government mandates. And yet more good news: the amount of technology and capital being brought to bear is unprecedented.

According to New Energy Finance Ltd., a London-based research firm, in 2007 some $148.4 billion was invested globally in what it calls “clean energy technologies, companies, and projects.” That’s nearly a four-fold increase over 2004 levels. And the 2007 estimate may be too low, according to Mark Mills, a co-founder of Digital Power Capital, a private equity fund that invests in energy technologies, and the co-author of The Bottomless Well, a provocative book on energy. Further, Mills points to two critical differences from the 1970s, when energy price spikes hit the U.S. They are the huge amount of venture capital now available to energy entrepreneurs, and “the phenomenal new suite of technologies that are being brought to the market that can address the problem.”

Back in the ’70s, there was little private capital available to entrepreneurs who were developing new energy technologies. Today there are several thousand firms providing venture capital or private equity. And they are providing funding to inventors who can tap a staggering array of new technologies, from nanotechnology to high-bandwidth wireless communications, as they work to come up with new energy solutions.

Indeed, with oil selling for more than $130 per barrel, energy technology companies are booming, as evidenced by the success of First Solar Inc. In 2007, the solar power company, which makes thin-film solar panels, was the best-performing stock in the U.S. According to the Wall Street Journal, First Solar’s stock was up nearly 800 percent last year. Since the company’s initial public offering in 2006, its stock has increased some twelve-fold in value. It now trades for more than $300 per share, and has a price-to-earnings ratio of about 124 and a market capitalization of $25 billion. On a market cap basis, that puts First Solar (which had 2007 revenues of $504 million) on par with a company like Dominion Resources, a major utility with some 2.4 million retail accounts that in 2007 had revenues of $15.6 billion. Just one other comparison: First Solar has fewer than 1,500 employees. Dominion has 17,000.

The same frenzy can be seen in the wind sector. In June 2006, shares in Broadwind Energy were selling for about $1.30. By late May of this year, shares in the company, which builds towers and other equipment for the wind industry, were trading for about $26 per share.

Whether the current investment trend is a bubble remains to be seen. Perhaps First Solar is, in fact, worth as much as Dominion; perhaps not. What’s abundantly obvious is that fortunes will be made and fortunes will be lost. But it is far better that these risks – and these rewards – be taken by the private sector. No government agency, whether it is the Department of Energy or another, can react as quickly as the private sector can. Entrepreneurs are seeing the opportunities and they are seizing them. That was evident last month, when Japanese auto giant Nissan Motor announced that it plans to begin selling an electric car in the U.S. by 2010. Carlos Ghosn, Nissan’s chief executive, made it clear that fuel prices were a factor in the company’s decision to build electric cars, telling The New York Times that “the shifts coming from the markets are more powerful than what regulators are doing.”

That’s the essential point: markets, not governments, are going to determine the pace of our transition to alternative and renewable fuels. The length of that transition – which will likely last several decades – depends almost exclusively on how quickly those new sources can become cost-competitive with fossil fuels.