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Dean says BP supports a mandatory system of "cap and trade" for carbon emissions in the U.S. -- in which the government sets limits on carbon emissions and allows companies to trade credits for reduced emissions to offer an economic incentive to bring down pollution. "We advocate this because we believe there needs to be a global solution to climate change, and we believe the best way to do that is to put a cap on carbon," says Dean.
BP also says it plans to reduce its own carbon emissions by 24 million tons per year, which it says is the equivalent of making the entire city of Chicago carbon neutral.
A US problem, too
BP's plans to process heavier grades of crude as well as bitumen at its U.S. refineries rankles green groups, too.In addition to its project with Husky, BP wants to add 260,000 barrels a day in production capacity to its Whiting, Ind., refinery near Chicago to process heavy crude from Canada. "That is really scary to environmentalists," says NRDC's Mogerman. "It is heavy sour crude, which means it has a lot of sulfur and it takes a lot of energy to break it down. We have real concerns about significant increases in CO2 and carbon-monoxide particulate matter."
The NRDC claims permits being considered by the Indiana Department of Environmental Management let BP avoid federal pollution controls by excluding emissions from three new flares at the refinery. Refineries use flares as safety valves to burn off excess gasses.
"IDEM allowed BP to assume that the large and costly flares will not be used at all. In comparable refineries, flares emit thousands of tons of dangerous pollutants annually," said NRDC attorney Ann Alexander in a statement.
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BP's Dean responds that the three flares will only be used in rare emergencies, so it makes sense to exclude them.
The U.S. Environmental Protection Agency recently cited BP for several Clean Air Act violations at its Whiting refinery.
Alternative energy
Environmental advocates read recent comments by BP chief Hayward as an ominous sign for the company's alternative-energy division. At a meeting with analysts and investors in late February, Hayward said BP will expect a bigger contribution to shareholder value from such efforts.Senior BP managers later said that doesn't mean an outright sale of the division, launched in 2005. But given that competitor ExxonMobil (XOM, news, msgs) has a return on equity nearly 50% higher than BP's, green advocates worry what it does mean. (BP's stock, by the way, is down about 5% over the last year -- better than the S&P 500 ($INX), but not Exxon, which is up 13%.)
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"It seems clear if the alternative-energy units have to be judged by whether they make money or have prospects of making money, that puts them on notice," says Myron Ebell, the director of Energy and Global Warming Policy at the Competitive Enterprise Institute in Washington, D.C. "Because most of the units don't make money or have any prospects of making money and to the extent that they do it is because of government programs and subsidies."
But BP spokesman Neil Chapman says the company still plans to invest $8 billion in its alternative-energy businesses between 2005 and 2015, "more than anyone else in alternative energy." "We haven't changed our commitment to the alternative-energy business. We believe we are growing a strong and viable business which offers an excellent growth opportunity and positions us well for the future," says Chapman.
Chapman says BP will have 450 megawatts of capacity from wind power by the end of this year, up from 30 megawatts in 2006, and that it is adding a wind turbine a day. BP is developing hydrogen power and carbon sequestration projects in California, and it is doubling its investment in solar energy development this year. "These are positive demonstrations of our commitment to the alternative energy business for growing wind, solar and hydrogen power, and carbon sequestration," said Chapman.
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And not all environmentalists have thrown in the towel on BP. "They are still the leader in terms of sustainability," says Julie Gorte, the vice president for sustainable investing at Pax World Management, which considers the green profiles of energy companies before investing in them. She cites the company's ongoing efforts to reduce its carbon emissions, BPs efforts to develop alternative-energy sources and a $500 million contribution to academic research on green energy development.
"Most corporations support good causes," answers NRDC's Mogerman. "This is an issue of how they portray themselves in the media compared to what they are doing to impact the rest of the world. They could live up to the image they portray. But they chose not to."
At the time of publication, Michael Brush did not own or control shares of any of the companies mentioned in this column.
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