"We literally live in the problem - feel it and breath it - this is a huge battle we absolutely need to win," said Changhua Wu, Greater China Director at The Climate Group.  "Technology is the most critical part of the puzzle."  Previous incentives meant to boost renewable energy produced lopsided results - huge surpluses of wind and solar capacity with no way to integrate them into existing power grids, leading some to describe China's green tech sector as a mere bubble.  (Read more: China's smog driving top foreign talent away)  But with water shortages threatening industries across the board, contamination of food, air and water posing grave risks to public health and pollution touching off incidents of civil unrest, the destruction of China's environment poses an existential threat. China's command and control economy has been forced to reckon with a vast untapped demand.  By announcing drastic targets for pollution reduction by 2018, the government created a market for whatever technologies will bring these ends about.  The $800 billion in spending will augment $920 million in venture capital that was spent on clean technology startups in 2013, according to the Cleantech Group, and $1.2 billion in private equity, according to Hong Kong's Centre for Asia Private Equity Research. Heavy industries also add to the pot as they hustle to meet new standards.  As the sector expands and demand diversifies, more foreign firms are developing technology specifically for China at a time when Chinese innovators are eyeing the market.  Wu Yang, a former Chinese petroleum engineer, set up his Texas-incorporated battery company, Microvast, with the hilly smog-shrouded central megopolis of Chongqing in mind. Microvast forged a joint venture with a local bus company to pilot its lithium titanate batteries.  The batteries last up to ten times as long as the lithium ion batteries typically used in vehicles and they charge in 10 minutes. While they are too big for passenger cars, they are ideal for the millions of buses that are the primary form of transport in China's rapidly expanding cities.  (Read more: China smog makes capital 'barely suitable' for life: report)  The combination of innovation and market savvy won first round support from the International Finance Corporation's Clean Technologies Venture Capital Team.  Today 50 buses in Chongqing run on Microvast batteries, a number that will double once a second charging station is completed. In 2011 the company's revenue hovered around $10 million. Last year it was $100 million. And the company is looking to expand into more Chinese cities as well as Hong Kong and Thailand. An anticipated jump to cars would mean more growth.  "If you are a clean tech company, you are going to think about not whether you will go to the Chinese market, but when," said Peter Cook, senior investment officer with IFC's Cleantech Venture Capital Team.
Beijing's "war on pollution" has sparked renewed interest in clean technology, with many startups vying for a piece of the $800 billion pie.