BP: It's Not Easy Being Green

Since the late 1990s, British Petroleum has been trying to woo the public as the oil company with an environmental awareness. The company changed its logo to a green and yellow sunburst and bought a significant stake in solar energy. Vanity Fair's recent green issue profiled Lord John Browne, the CEO of BP, alongside environmental champions such as the Natural Resources Defense Council:

The best chair in the boardroom of the world's second-largest oil company is not where you expect to find a committed environmentalist. But Lord John Browne of Madingley, chief executive of British Petroleum, is exactly that. Soft-spoken and highly regarded, he has vowed to take B.P. "Beyond Petroleum." It is seemingly contradictory, if not somewhat perverse, for an oil giant to place itself at the forefront of efforts to reduce carbon emissions. Old-style environmentalists may convulse at the idea of a "green" oil company, but under Browne, who sits on the board of the influential U.S. group Conservation International, B.P. has pledged to invest $8 billion in solar-, wind-, and hydrogen-energy technologies over the next decade. That's still minute compared with B.P.'s business in traditional oil and gas, but who has better resources, expertise, and incentive to forge our energy future than a profit-driven energy company? Since 1990, B.P. has reduced its greenhouse-gas emissions by 10 percent. Says Browne, "The whole point is that no one should be able to use the environment without restoring it."

Okay, when you are in competition with the likes of Lee Raymond of Exxon Mobil, sounding more progressive isn't hard to do. But even environmental groups like the Sierra Club rank BP among the better energy companies on environmental policies. Which isn't to say there haven't been concerns. BP has extensive holdings in Alaska and has been criticized for failing to report spills at its Prudhoe Bay operations and in 1999 was fined $22 million related to dumping of hazardous waste there.

Safety has been an issue, as well. On March 23, 2005, fifteen people were killed and 170 injured at BP's Texas City refinery when a "distillation tower flooded with hydrocarbons and was overpressurized, causing a geyser-like release from the vent stack." An investigation by the U.S. Occupational Safety and Health Administration led to a $21 million fine.

This week the Texas City refinery is back in the news. In an article in the Houston Chronicle, BP reported to the Environmental Protectional Agency that its emissions in 2004 tripled over the previous year, raising questions about the accuracy of its past self-reports. The controversy revolves around the method the plant used to calculate emissions, specifically formaldehyde and ammonia, common components of smog and soot, respectively. The newly reported numbers make the Texas City facility far and away the worst polluting refinery in the country, three times worse than the second-most polluting plant, Exxon Mobil's refinery in Baton Rouge.

As the Houston Chronicle article notes:

In 2004, a report from the EPA's inspector general concluded that the government was not ensuring that the nation's refineries were reducing emissions, despite a court order to do so. Part of the problem, according to the report, was that the agency was not monitoring pollution to double-check the industry's numbers.

How can it be that company compliance can be based on theoretical calculations, not actual sampling? Harris County ranks among the worst in the country for toxic air emissions. The implications for increased emissions are significant.

But the pollution review also could have ramifications for the Houston region's efforts to clean up smog, plans based, in part, on emission estimates provided by companies to the government. If BP's estimate to the EPA turns out to be correct, the additional and previously undocumented pollution could be enough to influence the state's plan to reduce the region's smog, experts said.

For a company working hard to convince shareholders and the public that energy production and environmental protection are not mutually exclusive, the refinery report represents a dark smudge on the reputation of BP and its media savvy CEO. And also a golden opportunity to prove that being green goes deeper than the pages of the latest annual report.