Business green news have reported that the Energy and Climate Change Secretary Chris Huhne has this afternoon confirmed that the government will not provide funding to the Scottish Power's proposed Longannet carbon capture and storage (CCS) project.

Speaking in parliament, Huhne said that "despite all parties working hard" the government and the consortium behind the planned scheme were "not able to reach a deal and will not be proceeding with the project".

The move had been widely expected following recent reports that the negotiations had run into difficulty over the level of government support on offer.

The Longannet project had been the only scheme in the running for a £1bn government-backed competition. But a recent study undertaken by the consortium behind the project had raised concerns that the scheme would cost significantly more than had been originally anticipated.   

Confirmation that the project will not now be awarded the government funding came after Prime Minister David Cameron insisted that the coalition was fully committed to making funding for CCS projects available.

Responding to a question from Labour's energy spokesman Tom Greatrex, Cameron said that the money earmarked for CCS would still be available to other projects.

"The funding that we set aside for carbon capture and storage is still there, that funding will be made available,"  he said.

"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."

The Department of Energy and Climate Change also stressed that it will continue to support the UK's embryonic CCS sector, adding that a new £1bn funding competition would now be launched and that it expected significant interest from a number of projects.

"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," the department said in a statement. "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."

However, the decision will be seen as a major blow to the government's low carbon agenda and makes it increasingly unlikely that the UK will meet its target of having four large scale CCS demonstration project in place by 2018.