The UK Government has scrapped plans for its £1bn competition for carbon capture and storage (CCS) technology.
The technology was intended to capture carbon dioxide emissions from power plants and store them underground.
The government said: "Following the Chancellor’s Autumn Statement, HM Government confirms that the £1bn ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available.
"We will engage closely with the bidders on the implications of this decision for them."
The government’s move puts two advanced projects in doubt despite predictions that the technology could play an important role in meeting emissions-reduction targets.
The projects competing for the funding include Shell and SSE’s Peterhead gas-fired scheme and Capture Power’s White Rose project in Yorkshire.
Commenting on the government’s decision, Capture Power CEO Leigh Hackett said: "It is too early to make any definitive decisions about the future of the White Rose CCS Project, however, it is difficult to imagine its continuation in the absence of crucial Government support."
Shell and SSE said in separate statements that the government’s decision was disappointing and represented a missed opportunity for the country.