In 1995, Bill Gates spoke at an IDC symposium in Europe, and was asked what his greatest challenges were. He replied that it was the small, upstart company that probably hadn't even been formed yet. Although it hadn't been founded at that point, Google was the company-to-be that was keeping Gates up at night. And less than a decade after it arrived, the company hasn't just mirrored Microsoft's business success; it has also been mirroring Gates' philanthropic efforts.

Despite its rapid expansion and the occasional accusation that it doesn't always live up its famous "don't be evil" philosophy, Google's business model is arguably the closest a multinational has got to what author David Bornstein calls social entrepreneurship. The idea of making a profit while changing the world for the better isn't a new one, but Google's managerial ethos combined with its revolutionary technology and internet advertising-based business model has made it possible for the company to do this more successfully than ever before.

Perhaps unsurprisingly for a company that has built a reputation for engaging with social issues, the past two years has seen Google emerge as one of the most high-profile advocates of greater action on climate change. The company's philanthropic arm, Google.org, has been busy, funding a wide range of environmentally-conscious projects addressing issues such as climate change and energy security. It might not yet be giving at the same rate as the Warren Buffet-fuelled Gates Foundation, but it is still making waves.

One Google.org project, RechargeIT, sits under Google.org's climate change programme. The company issued an RFP last September for plug-in hybrid vehicles (cars that can run on fossil fuels, alternative fuel, and electric power). It is offering $10m in funding for companies that can contribute to the development of such vehicles and auxiliary projects.

It is interested in what it calls 'vehicle to grid' systems, in which plug-in hybrids could be used as a means of stabilising volatile demand on electricity networks by feeding power back to the grid at peak times (essentially turning them into batteries with wheels). The Brookings Institution, CalCars and the Rocky Mountain Institute have picked up hundreds of thousands of dollars between them from the search giant.

Google's other big product is RE <C (renewable energy less than coal), which is an attempt to hurry along the renewable energy sector's attempts to achieve cost parity with fossil fuels. Coal power, which currently delivers 50 per cent of the US's energy, still costs less than wind or solar power, but organisations in the field have talked about achieving cost parity within five or six years.

Google's initiative will provide tens of millions of dollars in funding to help companies get there, and the ultimate goal is to produce a gigawatt of affordable, renewable energy. It is already working with eSolar, which uses mirrors focused on thermal collectors to power turbines using solar energy, while another of its investments, Makani Power, wants to harvest wind energy at high altitudes.

Ron Pernick, co-founder of cleantech market analyst Clean Edge, said that the focus on reducing the cost of clean energy meant Google is standing out from the raft of cleantech investors that have entered the market in recent years.

"They have actually put a target on the table," he says. "Many companies are putting money behind clean energy and making it a key initiative. But Google did something different – it said: 'We're going to bring renewables to cost parity.' "

In addition to its research grants, Google has also vowed to offer hundreds of millions of dollars in project funding, to help companies bridge the tricky gap between research and commercial production.

Of course, as Pernick observes, compared to the billions flowing into the cleantech sector from energy firms and conventional investors, Google's outlay represents little more than a trickle.

"What Google is doing is commendable, but it's dwarfed by other announcements from other corporations," he says. Just last week, he points out, power firm AES and private equity group Riverstone teamed up to pile $1bn into solar investments, while Southern California Edison similarly pledged $875m to build 250Mw of solar capacity.

But despite the relatively small scale of its investments, Google's interest in cleantech is significant in other ways. For one thing, it's the only corporate philanthropic effort to invest in cleantech on a non-profit basis that EuroSIF executive director Matt Christensen knows of.

"What I see most is that corporates such as GE look at this as an opportunity to create business divisions or augment existing business operations," he says. "The common framing is that those investments are done with for-profit motives. "

Moreover, just because Google is not chasing a profit with its cleantech investments does not mean it is not expecting to generate commercial benefits from its push into renewable energy.

Industry watchers shouldn't underestimate the search giant's brand as a factor in the equation, says Pernick.

"Google is a company that can show a lot of innovative verve, and it goes back to its concept of doing no evil – the counter to that is that you do good, " he says. "There is a mission-driven zeal even around its search capabilities. People are looking at this and saying: 'If they brought the internet together in the way they did, can they do that for energy?'"

It is also worth observing that the firm lives on electricity, perhaps more than many others, because its business model is based largely on herding information, and you need plenty of computing power to do that. Consequently, it is easy to understand why in addition to investing in independent cleantech firms, the company has created a dedicated R&D team for clean energy and is applying its own engineering expertise and enviable recruitment machine (remember Microsoft boss Steve Ballmer's reported fury that Mountain View was hoovering up all of the brains in the Valley?) to tackling the problem.

Five years ago, recalls Pernick, people were asking him who the Google of clean energy was going to be. Perhaps the answer should have been obvious, even then.