CLEAN TECHNOLOGY HASN'T BEEN RAKING IN the cash of late. Last year venture capital flows to the global cleantech sector plunged 33 percent, to $6.46 billion, San Francisco–based research and advisory firm Cleantech Group reports.

This slide may suggest that the skeptics are right about cleantech as an investment: It was a fad whose day has come and gone. But many experts contend that cleantech isn’t dying, it’s transforming. Helping to drive that change, and the current dip in funding, is the arrival of cheap, abundant natural gas on the U.S. energy scene.

Although the numbers frequently change, the U.S. Energy Information Administration recently estimated that there are 2,203 trillion cubic feet of recoverable natural gas in the U.S., enough to meet all of the country’s energy needs for 92 years at 2011 consumption levels. Through early February this year’s average contract settlement price was $3.35 per million BTU, the standard measurement unit for natural gas, compared with $9.04 in 2008. Natural gas thrills major energy companies with the promise that the U.S. could become a net exporter — in 2010 oil giant Exxon Mobil Corp. paid $35 billion for Houston-based producer XTO Energy — but it’s also helping to recast cleantech’s winners and losers.

Dallas Kachan, managing partner at Kachan & Co.  

“There are a series of technologies and business models that compete directly with natural gas,” says Sheeraz Haji, CEO of Cleantech Group. “For example, solar power plants have had a challenge because they get compared with natural-gas power plants.” Venture capital investment in renewable wind power has also fallen off, Haji adds. Like their solar and natural-gas counterparts, wind plants produce energy on a large scale, but they can’t compete with natural-gas prices.

“Biofuels as an investment thesis have also been hurt by low-cost natural gas,” says Richard Stuebi, founder and president of NextWave Energy, a Cleveland-based cleantech consulting firm. Excitement over emerging technologies that would allow vehicles to run on natural gas is supplanting the buzz around biofuels as a petroleum substitute, Stuebi explains.

But Haji notes that even though natural gas has turned some venture capitalists off cleantech, it could boost subsectors of this broad and diverse industry. Thanks to natural gas, he predicts, several cleantech chemicals makers will attract growing attention and investment capital.