How government can "safely" invest in the venture market?

Tom Evslin recently touched on the dangers of government dumping money in the venture market, which is something he's done before and will no doubt do again, but it's really hard to stop the government from spending money, so I wonder if it might be easier to at least try to spend it (more) wisely.  For example, instead of saying, "we're going to spend $30 billion on funding a green energy alternative, and we choose to spend it on so-and-so companies that work on the such-and-such alternative" the government could instead set up an X prize or Netflix prize-style contest that sets up the parameters of a problem to be solved (generate so much electricity at such-and-such a cost) and allows individual business to figure out the solution to the problem.