Government plans for Britain to become a world leader in clean energy technology suffered a double setback yesterday after BP said that it was abandoning the country's wind energy industry and pulling out of a competition to build a demonstration carbon-capture and storage plant.

The oil company informed the Government last week that it would no longer be submitting a bid for a government-funded scheme to develop a coal-fired power plant using carbon capture and storage (CCS), an experimental technology that strips out CO2 emissions for safe storage. The CCS competition was announced in November last year and is a key feature of the Government's plans to fight climate change while creating one million green-collar jobs in renewable energy.

A spokesman for BP, which announced record third-quarter profits of £6.4 billion last week, said that the group had withdrawn because it had struggled to find suitable partners.

“We came to the conclusion that we could no longer put together a winning consortium,” the spokesman said. He added that BP was dropping plans to invest in UK windfarm projects in favour of better returns in the industry in the United States.

BP's move triggered protests from green groups, which accused the company of abandoning its stated commitment to move “beyond petroleum”.

Keith Allott, the head of the climate change programme of WWF-UK, said: “It's deeply disappointing that one of Britain's leading companies in this field is choosing not to invest in the green energy revolution we so desperately need while continuing to invest in conventional hydrocarbons. It seems incompatible with the company's previous positioning of moving ‘beyond petroleum'.”

The development of CCS technology is considered a critical step in tackling climate change. In theory, CCS equipment could be retrofitted to existing coal-fired power stations around the world, allowing for rapid cuts in CO2 emissions. BP Alternative Energy had been on a shortlist of four companies that was announced in July. It included E.ON UK, which wants to deploy CCS technology at its proposed coal-fired power station at Kingsnorth, Kent, as well as Peel Holdings and ScottishPower.

By reducing the field to only three players, the withdrawal of BP represents a significant blow for the Government's competition.

A spokeswoman for the Department of Energy and Climate Change sought to play down the significance of BP's decision. “We continue to have three strong bidders who are committed to the project and to CCS,” she said. “BP's decision does not compromise the integrity of the competition.”

BP insisted that it remained committed to renewable energy throughout the world. “We remain very supportive of alternative energy technology and we continue to invest in hydrogen energy projects in Abu Dhabi and California,” a spokesman said.

Royal Dutch Shell, the largest UK company by market value, also withdrew from the UK wind energy industry this year, citing rising costs.

Compounding the problems facing the Government's CCS project, RWE npower is preparing to initiate a legal challenge over the selection process for the competition. Npower was excluded from the shortlist because of a technicality.

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