The state-funded (to the tune of £1 bn) carbon capture and storage project at the Longannet power station in Fife has been cancelled. The news came with a UK government announcement that “a decision has been made not to proceed with Longannet but to pursue other projects with the £1bn funding made available by the government.”

Earlier this month, UK newspaper the Guardian reported that Longannet, the only remaining project in the government’s competition for CCS funding, was on the brink of collapse because Scottish Power and its partners, Shell and the National Grid, were concerned about its commercial viability without more public backing. Earlier, doubts within govenment about the project came to light when prime minister David Cameron answered a parliamentary question with the statement “What I can say is that the funding we set aside for carbon capture and storage is still there, is still available. Clearly the Longannet scheme isn’t working in the way they intended. But the money from the government, the support from the government for this vital technology is there.”

Chris Huhne, the energy secretary, later added that “despite everyone working extremely hard, we’ve not been able to reach a satisfactory deal for a project at Longannet at this time, so we’ve taken the decision to pursue alternative projects.” He said: “A billion pounds is enough to demonstrate this vital new technology in the UK, but it’s got to be spent in the most effective way.”

In May, the responsible ministry DECC submitted seven UK-based CCS projects for European funding, including the Peterhead gas-fired power station in Aberdeenshire in Scotland, although it will apparently take longer to get the technology into operation at that site than at the more advanced Longannet.

Institutions and lobbying groups were generally condemnatory of the decision to cancel. The Longannet project would have brought the UK to the forefront on tackling greenhouse gas emissions from coal combustion plants, said Keith Allott, head of climate change at WWF-UK. “Because Longannet is an existing station, it was a good choice to get CCS fitted quickly and to avoid the emission risks involved in building a new coal power plant,” he added.

He went on: “Given the troubles facing the nuclear industry, and the delays to the CCS programme, the only rational response is for the government to redouble efforts on energy efficiency and clean renewable energy. This is the sure-fire way of keeping the lights on, avoiding costly gas dependency and meeting our carbon reduction targets.”

The UK government attempted to add a positive spin to the news, with an announcement by Chris Huhne, secretary of state for Energy and Climate Change concerning the next steps in the Carbon Capture and Storage demonstration programme. The Longannet decision, he said, “balances the UK’s low carbon ambition with the need to ensure taxpayer’s money is invested in the most effective way and that the government’s long term vision for CCS deployment together with an industry action plan will be set out when the selection process for further CCS projects is published”. £1bn will be available for a new process and DECC is expecting a number of promising bids from both Scotland and England. Ministers will meet with industry leaders to discuss next steps and lessons learned at the Carbon Capture and Storage Development Forum on Wednesday 2 November.