This post is from CNBC.com features writer Ken Stier.

Pat Sullivan / AP A truck enters a BP chemical plant near Hitchcock, Texas

There is much of interest--and to praise in BP’s latest Sustainability Report (2007), issued Tuesday. But there is a notable omission, one that exposes a fundamental contradiction, not just in this well-meaning company, but across the energy sector, struggling to adjust to a carbon-constrained world.

The omission concerns the UK’s firm significant investment--initially $5.5 billion--in developing oil from the tar sands of Alberta, Canada. Producing this ‘unconventional’ oil is hugely energy- and water-intensive and undermines much of the environmental good derived from BP’s

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[BP  Loading...      ()   ] multi-billion dollar investment in renewable energy.

Besides ballooning greenhouse gas emissions (100m tons annually by 2012), the Sunrise project in northeast Alberta, could “kill off” 56,000 square miles of forest that serves as a critical carbon (absorption) sink, according to Greenpeace which has condemned the move as among the “greatest climate crime” in history.

Of course investors have had different take on the decision. Stock prices rose for both BP and its partner in the project, Calgary-based Husky Energy (which is controlled by Hong Kong Billionaire Li Ka-Shing), when the project was announced last December.

That came from BP’s CEO Tony Hayward and seemed to be an abrupt turn-around from the company’s green agenda launched by former BP chairman, Lord Browne in his famous ‘Beyond Petroleum’ speech at Stanford University in May, 1997.

But aside a thumbnail mention in a company chronology, no attention is paid to this controversial investment in this report--much less a justification. Of course the bottom-line justification is likely to pretty obvious soon. This project was launched when oil was just approaching $100 a barrel. The first phase calls for production of 60,0000 barrels a day by 2012 and 200,000 bpd by 2020 – and for 40 years on.

With seemingly permanently higher oil prices, it is hard to really argue with these numbers.

The problem is that by not addressing this issue at all in the Sustainability Reports - which many regard as a sop for the corporate responsibility constituents - BP could appear to be speaking out of two sides of its mouth. (The report straightforwardly spells out the company’s climate concerns and details how it is spending $8 billion, over 10 years, on renewable energy projects which is the subject of a later blog.) That’s hardly a crime, but it could strain credibility with ever more critical, and energy-savvy, audiences.

Deron Lovaas, for instance, vehicles campaign director at the Natural Resources Defense Council (NRDC), praises BP as the Big Oil pack leader on renewables but says they are just caught in the throes of conflicting priorities as their peers, in beginning to tackle the climate challenge while taking advantage of shorter-term fossil-fuel opportunities.

“That’s a tension that has not been addressed by the industry - they haven’t grappled with this - and I know this from many meetings with oil executives,” he says. “They see the drift [towards these unconventional energy sources] as something that naturally needs to occur as part of their business plan – but it is fundamentally at odds with a carbon-constrained world; they are diversifying but in the worst of all possible senses in terms of carbon and climate and environmental concerns.”

Questions?  Comments?  energysource@cnbc.com

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