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Almost a decade ago, BP, the former British Petroleum, reinvented itself as the sexy new poster child of the green revolution. The company rolled out the "Beyond petroleum" logo on a website painted in cheerful shades of green and yellow.

The logo is still there - somewhere. You now have to hunt for it. That's because BP, like many other members of the Big Oil club, are returning to their carbon roots. They are just doing it as quietly as possible. The retreat makes no PR sense.

But the real question is whether it makes economic sense when the prospects for green energy seem better than ever.

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Readers of the fine print in BP's 2008 annual report, published in February, might have spotted the green dilution. In a section under the ugly non-word "Resegmentation," the company revealed that the alternative energy business had been tucked into "Other businesses and corporate," along with shipping, aluminum and treasury activities. A downgrade, in other words.

Sure enough, BP announced internally last week that Vivienne Cox, the 49-year-old chief executive officer of alternative energy and the company's most senior female manager, is retiring at the end of the month (a website called picked up the tidbit).

BP insists it is not ditching its commitment to alternative energy, which in its case includes wind, solar, solar module fabrication, biofuels and carbon capture and storage systems (CCS).

But the rate of capital spending in this area is no longer rising rapidly. Last year it was $1.4-billion (U.S.). This year it is expected to be $1-billion or less.

For a company that spent $30.7-billion on capital expenditures and acquisitions in 2008, that's a drop in the oil bucket.

BP is not alone. In March, Royal Dutch/Shell, which had sold most of its solar business two years ago, said it is freezing its research and investment in wind and solar power to focus on biofuels. In a speech last November, Chevron's CEO, David O'Reilly, said that while renewable energy is "very real," it's not the answer, at least in the near future, because "it's not realistic to suppose we can replace conventional energy in a time frame that some suggest."

Meanwhile several oil and electricity-generating companies have shelved their CCS projects, which strip carbon dioxide from flue gases and inject it underground, shielding it from the atmosphere. No surprise here: CCS is highly expensive and makes little sense unless it's subsidized.

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In one respect, you can understand why oil and power companies are getting out of the green game. Oil prices are half of what they were a year ago, meaning alternative energy has become less competitive.

And oil companies are in a low-grade panic about their futures. Depletion rates are climbing - BP and some other biggies produce slightly less oil every year. The overriding goal is to find enough reserves to prevent a slow-motion suicide, not to erect wind turbines on hilltops to keep Greenpeace happy.

Furthermore, there is no real market for carbon credits, at least not in North America, or rules that set a price on carbon-dioxide emissions. Once those markets are established, oil companies will have greater motivation to invest in low-carbon technologies.

In another sense, the green retreat is coming at just the wrong time. Oil prices, while still well below their peak, are rising as the recession bottoms out; they have more than doubled since their February low of about $33 a barrel. Shockingly bullish calls on oil have returned. Russian energy giant Gazprom said prices could jump to $250 unless fortunes are plowed into exploration and development.

Top French oil company Total is telling anyone who will listen that oil production will "plateau" at 95 million barrels a day, only 10 million above the current level. Chucking alternative energy into the R&D closet looks like a mistake as prices climb.

Don't forget climate change. Negotiations to replace the failed Kyoto accord begin in Copenhagen in December. The United States is considering legislation that would reduce emissions by about 16 per cent from current levels by 2020. The European Union has raised the ante by calling for a 20-per-cent cut. China is urging the rich countries to cut emissions by 40 per below 1990 levels (Kyoto's baseline year) and help finance carbon-reduction efforts in developing countries.

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As China and the rich countries squabble over who will cut the most, China has promised a green revolution of its own.

In an interview with the British media in London this month, Zhang Xiaoqiang, vice-chairman of China's national development and reform commission, said the country plans a 75-fold expansion of solar power by 2020. China's ultimate goal is to get 20 per cent of its energy from renewables.

Put rising oil prices, the Copenhagen talks and China's lunge into renewable energy together and you have a scenario for a vast green market ready to be exploited. Beyond petroleum? You bet. Too bad the oil companies are de-greening themselves just when it makes business sense to do the opposite.

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