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'Beyond Petroleum' No More? BP Goes Back to Basics

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After a very public campaign to promote renewable energy, BP is inaugurating Earth Day as a markedly less "green" company — highlighting how certain business realities have run headlong into the once lofty expectations surrounding alternative energy.

In early April, Europe's second-largest energy company quietly announced that it was divesting of its wind power assets, part of what the company referred to as BP's "continuing effort to become a more focused oil and gas company and re-position the company for sustainable growth into the future." The decision followed BP's 2011 exit from solar power after 40 years in the business.

Still, Mark Finley, general manager of BP's Global Energy Markets and US economics, said the company still has alternative energy bonafides to burnish. In an e-mailed response to questions from CNBC, he touted the company's involvement in biofuels and ethanol. He expects renewable energy to continue to grow in importance for company in the decades to come.

"Alternative and renewable energies will be an important part of the energy mix moving forward, though the scale to which they contribute may grow at a slower pace than some predicted a few years ago," Finley said.

In its most recent assessment of the global energy market, called the Energy Outlook, BP frankly acknowledged the growing importance of oil and shale gas development. The company said both segments would account for "almost a fifth of the increase in global energy supply to 2030."

In many ways, BP's retreat from solar and wind power reflects how alternative energy – despite making strides globally – has lost some of its clout as major economies move to exploit fossil fuels.

(Read more: Finding an Edge in the Booming US Energy Market)

It also raises questions about how BP – which once coined the phrase "Beyond Petroleum" as part of a corporate re-branding strategy – can sustain its once high-profile commitment to alternative energy.

"It's undeniable that they have less assets to point to when they make a claim that they're backing the renewable energy sector," said Michel Di Capua, head of North American analysis at Bloomberg New Energy Finance.

"On the solar side they had both manufacturing and development: They were making equipment and putting projects on the ground. They exited that entirely," Di Capua said. "It's clear that they're trying to gather cash and redeploy into core businesses. "

As climate change has slipped lower on the public policy radar, major economies have embarked on a quest to exploit more natural resources. In particular, the U.S. is moving aggressively to tap domestic oil and gas resources. That makes North American energy markets too attractive for oil companies to ignore, and puts pressure on BP to invest heavily more in fossil fuel exploration.

"To the extent that natural gas remains abundant and prices in the U.S. remain low, it will create challenges to large scale deployment of renewables, due to the competition with gas in power generation," said BP's Finley.

"However, because of policy support and what we see as the downward cost curve of renewable technologies, we believe alternative energy will be the fastest growing segment of the energy market across the globe," Finley added. "Importantly, this growth is coming from a very small base, as renewables represent just 2 percent of the world's energy supply today."

Yet BP also has to acknowledge the dominance of fossil fuels. According to its energy outlook, BP remains the largest deep water lease holder in the Gulf of Mexico — the site of its infamous 2010 oil spill. The company has also expanded its presence inland, particularly in the Eagle Ford region of Texas.

(Read more: US Oil Moves Inland,Making Storms Less Disruptive)

Although solar and wind technology have grown worldwide in the last year – by 42 percent and 19 percent, respectively, according to recent data from the International Energy Agency – government financial support for renewables has fallen sharply.

That has forced companies like BP to rethink how much of their own capital they want to commit. In their heyday, the U.S. funneled a total of $29 billion to renewable fuel projects.

The company's energy outlook said that alternative energy faces "a different set of challenges, the most pressing of which – and the key factor limiting growth – is the affordability of subsidies."

Yet Bloomberg's Di Capua said BP's problems didn't necessarily spell doom for the entire sector.

"This was a case of one big company investing in renewables,and now it's pulling back," he said. "I don't think there's a trend necessarily, just a particular set of circumstances for BP."

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