CAMBRIDGE, Mass. ( TheStreet) -- President Barack Obama, speaking at the Massachusetts Institute of Technology, said innovation in alternative energy would ensure that the U.S. continues to lead the global economy.

"All of you are heirs to a legacy of innovation," he told the audience, which largely comprised a select group of students and faculty, a fifth of whom are involved in energy research such as quantum dot light bulbs, thin-film batteries and super-efficient windows. "The world is now engaged in a peaceful competition. The nation that wins that competition will be the nation that leads the global economy. I am convinced of that. And I want America to be that nation."

Renewable-energy research has been a focus of the new administration. The American Recovery and Reinvestment Act of 2009, signed into law in February, puts $16.8 billion toward energy efficiency and renewable energy. Some $5 billion of that amount was dedicated to local weatherization-assistance programs, with smaller sums going to cutting-edge renewable-energy investments. (A list of available funding opportunities can be found on the Department of Energy's Web site.)

Since then, the Department of Energy has been busy announcing investments that fit the bill. Awards passed the $1 billion mark last month.

In his speech at MIT in Cambridge, Obama said Boston's Charlestown neighborhood will break ground on a center to test giant wind-turbine blades, the result of a $25 million federal grant. He added that continued investment in renewable energy could lead to a carbon-trading market worth $2 trillion, a sentiment that has been echoed by Bart Chilton, chairman of the Commodity Futures Trading Commission's Energy and Environmental Markets Advisory Committee.

Last week, the Department of Energy said the Illinois Institute of Technology, the University of Maine and the University of Minnesota will receive up to $8 million each for wind-energy research.

In May, Obama said $467 million would go toward geothermal- and solar-energy projects. In September, the Department of Energy finalized a $535 million loan guarantee for startup Solyndra, which makes solar-voltaic panels. It was the department's first loan guarantee since the 1980s. Solyndra also received $286 million of venture capital funding in the third quarter, the largest of any company.

"Investment in this area is driven by a number of factors, but probably the most important one is government support of early-stage research programs in this area," said Emily Mendell, vice president of the National Venture Capital Association in Arlington, Va.

Still, environmentalists have criticized the administration for a lack of financial incentives to embrace renewable energy.

"The government has a limited source of funds with which to spur development into cleaner fuels," says Robin Chase, co-founder of car-sharing company Zipcar and the chief executive of transportation consultancy Meadow Networks. "Consumer choice could drive investment and consumption of alternatives if the pricing signals more accurately reflected costs. A carbon tax would immediately change the cost per dirty unit of energy relative to a clean unit, as well as to incentivize people to seek out efficiency and conservation approaches. Reducing existing subsidies in fossil fuels also changes the relative costs between clean and dirty fuels."

Obama acknowledged in his speech that the transfer from fossil fuels to renewable energy isn't yet a smooth one. "We all know there's no silver bullet to do it," he said. "But there's no question that we must do all these things."

The president, who attended a fundraiser for embattled Massachusetts Gov. Deval Patrick, stumped for the passage of Senate energy bill S. 1733, co-sponsored by Massachusetts Sen. John Kerry, who was in attendance, and California Sen. Barbara Boxer. The bill focuses on jobs that help to reduce greenhouse-gas emissions.