Vinod Khosla is bankrolling a ballot initiative that would tax oil producers and subsidize alternative energy -- technologies he invests in as one of the valley's most prominent venture capitalists.

If California voters embrace the November initiative, the tax on oil companies could generate $4 billion for projects intended to reduce the state's dependence on oil by 25 percent within a decade.

Such political moves are still new territory for the well-heeled venture capital community more accustomed to funding start-up companies than ballot campaigns. That changed in 2004, when the industry put its money behind another technology-building initiative: stem-cell research.

This marriage of personal and political passions makes some consumer advocates uneasy, while outraging the oil industry.

Initiative backers are currently gathering signatures, which they say they'll submit by the end of the month. Khosla says the measure, which he's already spent more than $1 million to back, is not about him. He says it's about ``doing the right thing.''

``We've got a climate crisis on our hands,'' said Khosla, a Republican who is joining Hollywood mogul Stephen Bing, a Democrat, to bankroll the initiative. ``We have an energy crisis on our hands. We have our oil feeding Middle East terrorism, and we need to do something about it. Besides, consumers are paying too much.''

The latest proposal to use taxes to subsidize technological innovation in California comes as critics are still wrestling with the first such idea: Proposition 71, which authorized $3 billion in public money for stem-cell research. Khosla gave more than $500,000 to that campaign, while Bing gave nearly $260,000.

If passed, the measure would tax oil production in California, the nation's third-largest oil-producing state. The revenues could be used for a number of purposes, such as subsidies to buy clean, alternative fuel vehicles or incentives to stimulate alternative fuel production.

Those fuels include the ethanol technologies -- such as those that produce fuel out of switchgrass, wood chips and other plant byproducts -- in which Khosla invests.

The measure would be overseen by the California Energy Alternatives Program Authority, a renamed and reconfigured state agency that would include members of the public who have specific expertise, including a venture capitalist and a consumer advocate.

The agency would have the power to issue bonds, a contentious point in the stem-cell initiative debate.

Political record

Khosla's biggest political contributions since 1999 have had no connection to his investments. He said he has no stem cell-related investments, and campaign finance records show he spent more than $1 million supporting a 2000 measure to lower the voter approval threshold on school bonds.

The Santa Monica-based Foundation for Taxpayer and Consumer Rights has criticized some private industry efforts to profit from the stem-cell initiative, calling them excessive. The organization does not yet have a position on Khosla's proposed measure, said John M. Simpson, the foundation's stem-cell project director. But Simpson said the measure has promise, even though significant concerns remain.

``We do need to do whatever we can to develop alternative energy sources,'' Simpson said. ``That's a great thing. We need to do something about the outrageous way that the oil companies and refiners are ripping us off. But I'm not sure that setting up a system that would take the money from the oil fat cats and let it line somebody else's pockets is an improvement.''

The oil industry is more blunt.

``This is not about alternative energy development,'' said John Martini, chief executive of the California Independent Petroleum Association. ``This is about getting the taxpayers to pay a dedicated revenue stream into the preferred projects the proponents have investments in.''

The measure's backers will inevitably use consumer outrage over high prices at the pump to help their cause, particularly as oil companies have reported record profits. But that could backfire.

Californians already pay for some of the most expensive gasoline in the nation. According to the American Petroleum Institute, an industry trade group, Californians pay roughly 60 cents a gallon in taxes, 15 cents higher than the national average. Only drivers in New York and Hawaii pay more.

Even though the proposed initiative prohibits oil producers from passing the tax on to consumers at the pump, the state Legislative Analyst's Office has warned that it would be difficult to enforce that provision.

In addition, Martini said oil companies would have less incentive to pump oil in California. That would shift more production to places out of state and beyond. That, too, would increase costs, Martini said.

A national trend

The initiative comes as political leaders around the country, particularly President Bush, have evoked similar themes as Khosla.

``America is addicted to oil,'' Bush said in his January State of the Union speech, in which he announced new funding for alternative energy research such as the cellulosic ethanol Khosla invests in and which is advocated by his oil-tax initiative. ``The best way to break this addiction is through technology,'' Bush said.

Those in the venture capital world say ballot initiatives are an unwieldy way to make a return on an investment.

The 2004 stem-cell initiative, Proposition 71, authorized $300 million a year for 10 years from the sale of bonds for stem-cell studies, but it remains mired in lawsuits.

``It's not like a venture capitalist is going to see a payback immediately or even in the next couple years,'' said Mark Heesen, president of the National Venture Capital Association, adding that there is no guarantee that the stem cell measure will even succeed in court battles.

Khosla believes that the California ballot initiative is ``the only way'' these technologies will emerge in a substantial way.

He dismisses suggestions by those such as consumer advocate Simpson, who say such a complex measure should be vetted through the Legislature. Khosla said many state politicians are too beholden to campaign contributions from oil companies.

``Getting Wall Street to invest in this area in a broad way is the only way we can solve our petroleum crisis, our `oil addiction,' '' Khosla said. ``I think this is the right thing to do, and I want lots of people investing in lots of things to solve this problem.

``Just because there's an opportunity for venture capitalists to invest, doesn't make it wrong. In fact, we know it's the only way to solve this problem.''