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"Earth is at a critical crossroads," announced the aptly named Earth Institute at Columbia University last year. The august research body warned the world solemnly that human activity was "threatening the health of the environment and potentially posing risks of unprecedented magnitude to our shared future".

Fast forward to 2010, and with the dirty stain of oil spreading inexorably over the clear blue waters of the Gulf of Mexico, threatening to choke the delicate wetlands of Louisiana and Florida, you can't help but make a link between the warning and the business model of BP. But there is an even better reason to "Think BP" when you hear the Earth Institute's warnings: a key member of its advisory board is none other than Carl-Henric Svanberg, chairman of BP and now perhaps persona non grata.

In June 2009, when the beleaguered oil multinational chose Svanberg for the top job, it explained that this was because, in addition to his dynamic business track record, he was personally committed to and an advocate of many corporate-responsibility issues, including human rights and climate change. Naturally, he is at home at the Earth Institute, where, as its website informs us, everyone is deeply worried that "today, approximately one in six people on the planet subsist on less than $1 a day. The world's population is expected to increase to 9 billion people by 2050, further straining Earth's resources and humanity's ability to thrive."

But what could the head of an oil company offer to researchers dedicated to helping "the world pave a path toward sustainability", apart from sanctimonious concern and hypocritical humbug, of which (doubtless) they already had plenty? Yet there are possible areas. Among the institute's oh-so-green initiatives "to help ensure a sustainable energy future for all" are big-money projects concerning nuclear power and the conversion of solid waste into usable energy: here, green values and business opportunities mesh perfectly.

"We are developing the next generation of carbon-capture and storage technologies, as well as working on questions related to renewable energy," continues the institute's website. And these are areas where there is a lot of money to be made.

Meanwhile, sitting on the board of another virtuous-sounding group - the Alliance for Climate Protection (ACP) - is one of the world's most famous green champions, Al Gore, the former Democratic vice-president, who founded the organisation in 2006. Alongside him sits Theodore Roosevelt IV. An "active conservationist", Theodore the Fourth is a member of the Wilderness Society's governing council, chair of the Pew Center on Global Climate Change, a trustee for the World Resources Institute - and a managing director of Barclays Capital.

Consider another environmental-economics powerhouse, Generation Investment Management (GIM). Yes, Gore founded it, too, but this time with the aid of David Blood - chief executive of Goldman Sachs Asset Management from 1999 to 2003. Blood's personal mission is to make businesses more "ethical and sustainable", and to this end he has dedicated the company to "long-term investing and sustainability research". GIM focuses on "environmental degradation, poverty and development". Oh yes, one other thing: it is now valued at $2.2 billion* (?1.5 billion).

As Paul Collier, professor of economics at the University of Oxford, says, there is a "new ethics of nature" and "economists are indeed the new guardians of nature". (The author of books such as The Plundered Planet: Why We Must - and How We Can - Manage Nature for Global Prosperity; he approves of this trend.) Economists use mathematical models in which ethics is coded as an austere utilitarianism where future generations, however remote, count for just as much as we do. As energy policy in general is highly utilitarian and focused on simple cost calculations, it makes the ideal tool with which they can reshape the world.

That's why, while he was Chancellor of the Exchequer, Gordon Brown turned to a former World Bank chief economist for insight into the implications of a changing environment. The Stern Review on the Economics of Climate Change was published in October 2006. Lord Stern is the epitome of a wise mandarin, equally comfortable advising on business or morality. He says, for example, that if transferring a pound from your pocket to someone in the 23rd century helps them more than it hurts you, there is an obligation to do so. Indeed, his report recommends the transfer of large amounts of money from today's energy users to, well, future governments.

Stern's report is, however, a mere firecracker compared with the ICBM of energy policy launched by free-market economists that tore through the social structures of Western democracy in the 1980s and destroyed the power of the unions along the way. The key battle was Margaret Thatcher's duel to the death with the National Union of Mineworkers (NUM) in 1984-85, the union that toppled Ted Heath's Conservative government in 1974. One of the rewards for her victory was a switch from energy produced as part of long-term national policy to supply by privatised companies with short-term objectives.

Mind you, one forward-looking feature was established with the government's support for new "climate-research" centres, such as the Hadley Centre at the Met Office and the Climatic Research Unit at the University of East Anglia. Research turned "decarbonisation" into a virtue - and a profitable one at that. Between 1990 and 2010, the Department of Energy provided a snug ?180,293,252 for climate science research at the Hadley Centre.

And so it continues. It is economics, not environmentalism, that has driven the search for ethically superior energy from "clean" sources derived from previously sacrosanct areas of wilderness, the exploitation of which has suddenly been legitimised, perhaps as new "energy farms" or for "biofuels". Likewise, previously off-limits coastal areas have been designated as not only suitable but also positively benign sites on which to drill for oil and gas (or so Barack Obama thought until April).

After all, the long-term interest - one might say the fuel - propelling countries is money. We don't have an ethical foreign policy and we certainly don't have an ethical energy policy. With their pretensions to such, nations have found a way to infuse economic priorities with a virtuous, ecological, green tinge. It is greenwashing on a global scale.

Greenwash" is the term environmentalists use to describe businesses that present themselves as green although their practices are not. It comes in a variety of shades.

The European Commission has paid environmental campaigners directly to carry out its political agenda. In 1999, at a cost of about €500,000, it set up a new group, the European Environmental Bureau, while also paying both the Friends of the Earth and the WWF €250,000 each to set up offices in Brussels. On another occasion, the Climate Action Network was given €140,000 for "capacity building". In fact, the Commission funnels about EUR3 million (?2.48 million) a year to environmental groups that it favours.

But that's a drop of oil in the Gulf of Mexico compared with the amounts that private foundations in the US are estimated to provide each year to environmental causes. The sums involved run into the hundreds of millions of dollars. One green organisation - the Tides Foundation - had net assets of $142,007,356 in 2006. Local green groups may rely on "flapjack and organic-soap fundraising mornings" - but real campaigns are funded by a very different and largely invisible mix.

Green idealism and ethics have been co-opted for some very hard-nosed practical purposes, as detailed by Sonja Boehmer-Christiansen, reader emeritus in geography at the University of Hull and editor of Energy and the Environment (one of the few journals to encourage debate about climate change), and Aynsley Kellow, professor of government at the University of Tasmania. And that is why, although UK energy policy has been guided for decades by strategic and financial interests aiming to reduce domestic coal use, promote nuclear power and create new financial markets, public debate has focused variously on the rights of Nottingham miners not to strike during the NUM's showdown with Thatcher and the need to save the Pacific atolls from disappearing under the waves. A similar mix, in which the gears of energy businesses are oiled with ethical grease, also characterises other advanced Western economies.

Everywhere, an important part of promoting and implementing pre-existing economic and national agendas is the use of non-governmental organisations, from Greenpeace to the United Nations Environment Programme, bodies that can more plausibly claim to base their recommendations on ethics.

Consider the European Union's commitment to encouraging the use of biofuels: is it a virtuous political initiative or a pro-business programme?

In March 2007, EU leaders, citing growing concerns over energy security and, of course, climate change, decided to raise the share of biofuels used in transport from today's level of 2 per cent to 10 per cent by 2020. Although green groups may have revised their views on biofuels and may not like the policy now, they certainly helped to put it in place. As did Neste Oil, which just two years later, in May 2009, was able to lay the foundation stone for a renewable diesel plant in the port of Rotterdam. Neste's biodiesel is a blend of palm oil, rapeseed oil and waste animal fat. Its Rotterdam factory, at an estimated cost of €670 million, will be the largest renewable-diesel plant in Europe, with an annual production capacity not far short of 1 million metric tonnes. You need either an EU lake or an EU target to get rid of all that.

But still, it is a good thing, isn't it? It is to save the planet, right? Not exactly. Biofuels make no sense economically or ecologically. As Alex Kaat, a spokesman for Wetlands International, an advocacy group based (like the Neste plant) in the Netherlands, puts it: "Deforestation and palm oil go hand in hand. It is definitely a very, very dirty fuel."

Logging firms, often affiliated with palm oil companies, generally begin by removing valuable hardwood trees, and then drain swamps and burn vegetation, releasing enormous volumes of greenhouse gases. In Indonesia and Malaysia, European firms have accelerated their clearing of rainforest for palm oil plantations. Some of the richest areas of the world for wildlife - home to rare species such as the Sumatran tiger, the orang-utan and the Malaysian elephant - have been sacrificed.

There are other side-effects, too, which environmentalists tend to downplay. Even by 2007, American farmers were already responding to the enticement of biofuel subsidies by planting more corn than at any point since 1944, in the process reducing rice, soybean and cotton crops to make room. In countries such as India, the price of rice jumped 10 per cent.

If nowadays there is a backlash against ostensibly green biofuels, the call seems only to be for them to be grown in less sensitive areas - on existing farms, basically. Yet 93 per cent of rainforest is cleared for food - cattle ranches and farms - not for logging, as we often imagine. Any policy that takes agricultural land out of production has direct consequences for the world's remaining rainforests.

What about "renewables"? This misleading term includes things such as biofuels, waste incinerators and even dams across the Amazon, all hugely environmentally suspect projects. But the sector's poster children are solar panels and wind turbines.

Even these technologies come with environmental problems. The former are made with some of the most hazardous chemicals known to industry - which may explain why workers in developing countries are tasked with the job (see box above). Wind turbines come with access roads and electricity pylons attached, not to mention thousands of tonnes of cement to anchor them. They offer their own peculiar intrusion into what might otherwise have been valued as landscape (see box, right). More to the point, neither source can match conventional power stations in terms of production. They simply cannot provide energy on the scale required to replace fossil fuels - yet public resources are being poured into them.

In the UK, there is a thing called the "renewables obligation" that compels power companies to purchase electricity from "renewable" sources - particularly solar and wind - thereby encouraging such virtuous activities. The UK's renamed Department of Energy and Climate Change has joined with its European partners in setting a target of generating 20 per cent of electricity via renewables by 2020. As renewables are more expensive, there will be a cost, of course, which the department puts at about ?6 billion. The money will come from consumers: poor people will suffer disproportionately, but a few people will get very rich.

Naturally, if the money had instead been put into tackling environmental problems directly by, say, protecting wetlands and forest habitats, or even through social projects such as raising the economic prospects of poor people to a point where they do not have to rely on chopping down trees, it would have gone a lot further. But that's politics.

So BP has a representative at the top of the Earth Institute. The European Commission funds offices for Friends of the Earth and the WWF. The UK government supports climate-change research. Have the poachers turned gamekeepers? Yes - although it might be more precise to say that the bootleggers have become Baptists. Everywhere, the bootleggers can be seen walking around in black, spouting biblical prophecies of doom - and growing ever richer in the process (see box, page 37).

Bruce Yandle, an economist at Clemson University in the US, coined the phrase "bootlegger and Baptist coalitions" in an article in Regulation magazine in 1983 that discussed cases where the economic interests of businesses and the moral concerns of campaigners coincide. The idea is that both the Baptists and the bootleggers want the sale of alcohol banned - but for different reasons: Baptists because they consider alcohol to be morally wrong; bootleggers because they want to preserve their illicit enterprise.

Naturally, the Baptists would vehemently deny that they are assisting the bootleggers, just as Greenpeace and its partners in the Climate Action Network would bristle at the suggestion that they are assisting multinationals, the nuclear industry, big oil or even states' expansionist instincts. Yet often this is the effect of their campaigns.

BOOTLEGGERS AND BAPTISTS: A COLLABORATION OF OPPOSITES

The term "bootleggers and Baptists" is used to describe situations where groups with opposite moral aims collaborate.

Sonja Boehmer-Christiansen, emeritus reader in geography at the University of Hull, and Aynsley Kellow, professor of government at the University of Tasmania, have discussed in their work many examples of bootleggers donning their black Baptist gowns in the sphere of energy politics.

- Canada has a nuclear industry to promote and happily backed a Kyoto protocol that made nuclear power "clean" again. After Kyoto, an estimated US$50 billion has been made from the replacement of old Soviet reactors in Eastern European countries

- Japan is energy poor, but since it was paying five times the market price to mine its own coal, it (like the UK and Germany) had a multibillion-dollar annual incentive to campaign for laws limiting its own coal industry

- And when the US, in a rare display of internationalism, pushed through laws to ban chlorofluorocarbons globally (the Montreal Protocol, the provisions of which came into force in 1989), its concern about holes in the ozone layer fitted very comfortably with its control of all the key patents for the replacements.

LET THE SUNSHINE IN? SOMETHING WICKED THIS WAY COMES

The main problem with solar energy arises from the use of large quantities of arsine and phosphine in the manufacture of solar panels.

It is estimated that each 10MW/year production of flat-panel III-V modules requires about 23 tonnes of arsine a year.

The quantities required in flat-panel designs could present great risks to the environment. Arsine is almost as toxic as methyl isocyanate: in 1984, the accidental release of 40 tonnes of methyl isocyanate at the Union Carbide factory in Bhopal killed 3,000 people and injured 200,000 more.

Solar panels are a toxic time-bomb. They may provide clean, green energy, but manufacturing them involves a witch's brew of toxic chemicals, the consequences of which may be dire once they end up in landfills - or slightly earlier if any eco-houses burn down.

DENMARK'S WIND TURBINES: A DANGEROUS AMOUNT OF HOT AIR

Denmark is the wind capital of the world - that's one of the reasons why Copenhagen was chosen to host the great climate change conference last year. Between 1985 and 2005, more than 3GW of wind-turbine capacity was installed, of which about 15 per cent was sited offshore.

There are few areas on western Denmark's coast and in its flat or gently rolling countryside that are unaffected. Fortunately, the nation's agricultural community has learned to love the modern intruders - or at least the subsidies.

As the sector expanded, so did the size of the wind turbines. The latest idea is to build 20MW versions as tall as the Eiffel Tower. Each turbine requires an access road, massive concrete foundations and, of course, electricity pylons.

Wind turbines, despite being so very green themselves, are antipathetic to nature. On forested hillsides, they require the clear felling of woodland; on low-lying coastal sites, they necessitate the draining of wetland to facilitate the construction of access roads and enormous concrete foundations.

As independent energy consultant Vic Mason has pointed out, such side-effects could stimulate the oxidation of peat (releasing carbon dioxide) and damage many sensitive habitats essential for particular species of wildlife.

Until recently, the most important subsidy supporting the sector was that the Danish National Grid (and hence consumers) was obliged by law to buy all the electricity produced by wind-power projects - and to do so at prices determined by the government, not the market. That's why Danish householders must pay almost double the UK price for electricity. Estimates of the costs of the subsidies differ - the Danish government says it is about DKr4 billion (?443 million) a year - but independent experts put it at about DKr10 billion a year. If the higher estimates are correct, it would mean that Denmark has been spending more on wind turbines each year than on education.

In spite of the cost, wind power generates only about 4 per cent of the electricity used in Denmark: the truth is that almost all of it is wasted.

Specialists believe that it is unrealistic to expect turbines to produce much more than 20 to 25 per cent of their potential annual output, and that has been the experience in Denmark. Sometimes there is too little wind, sometimes there is too much. Sometimes the machines are broken or being serviced and polished.

With wind turbines, a conventional power station must always provide back-up. For the Danes, traditional power stations with capacities equal to 90 per cent of the installed wind-power capacity must be permanently online to guarantee supply at all times.

But worse still, even when the turbines are busily whirring away, the electricity generally cannot be used. For "technical reasons", as they say, to ensure stability in the domestic grid, most of Denmark's wind power has to be exported at prices well below what it costs to produce. During 2003, 84 per cent of the wind electricity generated was surplus to demand at the moment the wind blew.

Energy specialists calculate that Denmark's exports of electricity to its large, hydro-nuclear-powered neighbours to the north cost local consumers about DKr1 billion each year.

All this combines to explain why, in practice, only 4 per cent of the electricity Danish consumers actually use comes from the turbines. For this miserly contribution to "green thinking", people must pay double the bills.

Nowadays - reneging slightly on its commitment to reduce Denmark's 0.0003 per cent contribution to the CO2 released annually into the atmosphere from the Earth - the Danish government is dismantling its obligatory purchase scheme, although owners of existing wind turbines and district heating plants will continue to receive subsidies. In fact, even after years of spending on an array of wind turbines, Denmark's carbon emissions were rising until recently.

What lessons do the Danish experiences offer us? None, it seems. The UK government is attempting to follow suit. It aspires to a European target of 20 per cent renewable energy by 2020. This nominally equates to about 20,000 2MW wind turbines, along with new systems for energy back-up.

A rule of thumb says that to prevent turbulence from adjacent turbines taking power from each other, they should be separated by up to 10 times their rotor diameter. Thus, the installation of 40GW of wind power in the UK would leave a turbine "footprint" (that is, the land directly appropriated), on land and/or at sea, equivalent in size to almost half the total land area of Wales.

As UK policy in energy is in essence English policy, that might seem like good news - half of Wales is left over for other schemes! Yet the situation is less rosy.

As mentioned, the nominal output of wind power is far greater than the actual output. A more realistic target for the Department of Energy and Climate Change would be the construction of 100,000 wind turbines. Unfortunately, Wales is too small for all those. Instead, a 10km-deep dedicated strip right around the coast of the British Isles would be required. Even Brighton, and its new Green MP, would be blown away ...

*Estimates vary regarding the current valuation of GIM. Capital MSL, a corporate financial and communications consultancy, would, however, like to point out that the company is worth $5.5billion.