A drilling rig in the Barnett Shale in Texas. (Photo by jermlac via Creative Commons)

The growing role of natural gas in the U.S. energy mix continues to confound and divide renewable energy experts and investors. Is America’s abundant supply of shale gas a boon for the renewable industry, or undercutting it?

That was the recurring question panelists sought to address during a talk, “Renewables: Boom or Bust?”, during a conference hosted by The George Washington University’s Planet Forward project in Washington, D.C on Tuesday. The energy industry panelists – who had previously worked as academics, investors, military leaders, or regulators – were sharply divided on the issue. To varying degrees, they all expressed support for natural gas, but some were more eager than others to overlook its drawbacks.

“It’s a godsend. America is drowning in natural gas,” said Robert Hefner, the 76-year-old founder and CEO of GHK Companies, a pioneering Oklahoma-based natural gas and oil firm. “The price is terrific for the United States.”

New drilling techniques like horizontal drilling and hydraulic fracturing — or fracking, as it’s more commonly known — have contributed to a near doubling in the past decade of technically recoverable natural gas reserves in the U.S., according to Energy Information Administration’s 2011 forecast. Increased extraction of these previously uneconomic shale reserves has caused U.S. natural gas prices to plummet from a 2008 high of nearly $13 per thousand cubic feet to below $2 — the energy-to-cost equivalent of $15-per-barrel oil.

This low-cost fossil fuel source gives the U.S. “an incredible competitive advantage over Asia and Europe,” where natural gas is less abundant and more expensive, added Hefner, who is also a member of Harvard University’s Belfer Center for Science and International Affairs. “That boost, I believe, is one of the significant things that’s driving our economy forward and keeping us going.”

But falling natural gas prices cuts both ways for U.S. renewable energy proponents.

Natural gas power plants can be cycled on and off more quickly than coal plants, making them better suited as “peaker” units to balance intermittent wind and solar power. They also burn cleaner and produce fewer planet-warming greenhouse gases than coal-fired plants and are less prone to catastrophic risk than nuclear reactors. Currently, natural gas accounts for about a quarter of U.S. electricity generation.

With natural gas prices so low, it’s extremely difficult for renewable energy to compete on cost. In Wired magazine’s January 2012 examination of “Why the Clean Tech Boom Went Bust,” the cripplingly low price of natural gas was cited as one of the main reasons.

“Natural gas is to the political debate about energy as the atomic bomb was to World War II,” observed Reed Hundt, the 64-year-old CEO of the Coalition for Green Capital, a renewable energy investment group. Not only does it radically reshape the balance of power, he said, but “we have no idea what’s going to happen next.”

Like the nuclear nonproliferation regime that evolved in the aftermath of destruction at Hiroshima and Nagasaki, the natural gas boom requires new policy approaches, the panelists said. “I think there’s this perception that innovation is restricted to widgets,” said New York Times environmental blogger Andrew Revkin, who was moderating the discussion. “Innovation is needed here in policy — if anything, more than in the widgetry.”

“We don’t have an energy policy in this country,” Revkin added.

But even now, retired Vice Admiral Dennis McGinn believes, the government has three options at its disposal that could be used to encourage renewable energy and alleviate the environmental concerns associated with fracking: Tax policy, direct or indirect investments, and mandates. “As we move forward in trying to achieve an energy strategy that makes sense not just for the next election cycle, but for the next five, ten, [or] twenty years, we need to carefully consider what are the best ways to employ those,” he said.

That plan should still include emission-free, clean energy, added McGinn, who is now president of the American Council on Renewable Energy. “Renewables have a wonderful price of fuel — essentially zero,” he said. Meanwhile, the natural gas cannot stay at $2 per thousand cubic feet for decades. “There’s gonna be a lot of eventual upward pressure on the price of natural gas.”

McGinn also said natural gas fracking needs better regulation. “It’s not presently being done universally in a responsible way. It’s kind of a Wild West out there with independent wildcatters.” While some companies “know how to do fracking right,” he said, “it’s much better if we have some level of regulation at the state and, where necessary, at the federal level to be able to extract this great source of energy in a way that doesn’t do a lot of damage.”

Hundt, a former Federal Communications Commission chairman, echoed McGinn’s concerns and noted a few of the issues raised by fracking opponents: the risk of groundwater contamination, the increased occurrence of earthquakes (which are believed to be linked to disposed fracking fluid migrating into fault lines), and the effects of fugitive emissions. Hundt also cast doubt on governments’ abilities to resolve these issues: “We do not have an effective, well-thought-through national regulatory scheme.”

The challenges raised by McGinn and Hundt were flatly dismissed by Hefner, who has long promoted natural gas as a bridge fuel to sustainable energy. “The entire problem with fracking has been drumming up fear by those who are opposed of it without much scientific basis,” he said.

EDITOR’S NOTE: An earlier version of this story misspelled Vice Admiral Dennis McGinn’s last name.