The state of California began investing in green technology companies three years ago, arguing this would support job creation.

tesla3.bmpIronically, while green companies are sprouting up everywhere as a result, the state is now considering having to pay them to stay in California, now that the companies are actually about to create jobs. A group of California lawmakers is proposing legislation to create a $45 million clean-fuel technology fund, to keep companies like San Carlos, Calif.’s electric car company, Tesla Motors. Word is, they’re considering wooing Tesla with $20 million in subsidies.

Here’s the story behind Tesla: Led by then-treasurer Phil Angelides, the large public pension funds such as CalPERS and CalSTRS, together with CalCEF, began pumping money into venture capital firms three years ago, earmarking it for green technology start-ups. VantagePoint Venture Partners, one of the beneficiaries, is a backer of Tesla.

However, the electric car maker (which we first wrote about here), founded here, wants to expand and is considering building an electric car plant in Pittsburg.

Hat-tip to the Merc’s Vindu Goel, who has recently launched his own blog about Silicon Valley, and pointed this out to us. He correctly suggests $20 million is a lot of taxpayer dollars to be paying to one company. Indeed, the company may not even succeed. It is a very high-end performance car, and high-priced too. Questions remain whether Porsche lovers will really go for something like this. And if they do, how many? What if the company goes bankrupt? Should we the taxpayers create a state green bankruptcy fund to support it a third time?

There’s a similar case unfolding with Nanosolar, a cutting-edge venture-backed solar company in Palo Alto, Calif., which has negotiated with San Jose about building a factory there. The city recently approved $2 million in subsidies to host the factory there (more context here).

[Update: Tesla’s Darryl Siry responds below in comments]