The shortlist will be reduced to 10 in the next six months
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An official report says plans for a Cornish new-town have a long way to go before they are viable.
Fifteen sustainable communities have been proposed across Britain.
The Eco-Towns Challenge Panel report says the sustainable aspects of the Imerys China Clay Community scheme "need further work".
Imerys says it intends to employ "strong sustainable principles" and enhancing transport infrastructure is a key element of the project.
Imerys wants to build at six locations: Par Docks, Bugle, Nanpean, West Carclaze, Baal and Blackpool clay pit and its plan is the only shortlisted project in the South West.
'Vision for town'
But only 10 of the low-carbon, towns will eventually get the go-ahead and the Eco-Towns Challenge Panel also criticised other sites in its report including Weston Otmoor in Oxfordshire and Curborough, Staffordshire.
The panel's role is to recommend potential improvements to each developer for their eco-town proposals, but is not responsible for assessing proposals.
The Imerys scheme is the only shortlisted project in the South West
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The panel of experts advising the government on the scheme says there is no clear idea of who "owns the vision for the town" in the Imerys project.
And while the report says "the promoter has the financial standing to deliver a high quality development and the close collaboration between the bidder and the local authority is commended" it says more work is needed on alternatives to road transport.
'So much diversity'
In a statement, Imerys said the development would use a high level of building materials from secondary aggregates which are a by-product of clay production and also "utilise Imerys' global expertise in the innovative use of building materials".
"Imerys also have plans for innovative energy supplies, which could include wind power, solar heating and biomass," the statement said.
"It is the opportunity to provide so much diversity in our scheme, from housing to employment to leisure and tourism, all linked to sustainable principles which makes the Imerys scheme stand out."
A decision on the final 10 schemes to be chosen is due in the autumn.
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