BP has abandoned plans for a £500m UK carbon capture power plant at Peterhead in Aberdeenshire, it has emerged.
The plan for Peterhead could have created 1,000 jobs
The energy company said the decision was a major disappointment but blamed Westminster delays over support.
About 1,000 jobs were expected to be created if the green project was ultimately given the go-ahead.
The Conservatives described the move as a "disaster", while First Minister Alex Salmond voiced his anger at the decision.
The SNP leader said: "Never has so great an opportunity been passed up because of delay and incompetence and the inability of Westminster ministers to take decisions.
"There will be other carbon capture projects, not least at Longannet, but this offered a further foothold in the hydrogen economy."
Mr Salmond had earlier warned MPs that government delays in supporting the project could put it in jeopardy.
The proposal was to generate "carbon-free" electricity from hydrogen, reducing greenhouse gas emissions by capturing carbon dioxide and safely storing it.
It would have seen the world's first industrial-scale hydrogen power scheme based in the Aberdeenshire town.
The plans won praise from energy experts, environmental campaigners and politicians alike for pointing the way forward.
A BP spokesman told the BBC Scotland news website that delays over the timescale had forced the decision.
He said the life of the Miller oil field central to the project had already been extended as long as possible but would not be available for the length of time needed.
The spokesman said: "The decision to cancel the project is based on timing. It's a disappointment to us."
Shadow trade and industry secretary Alan Duncan described BP's withdrawal as "a disaster".
Mr Duncan said: "The Peterhead experiment was to be the most pioneering of its kind and was the most advanced experimental project to capture carbon.
"It is a colossal stain on the government's reputation.
"This catastrophic course of events has been caused entirely by the government's dithering and delay."
Duncan McLaren, chief executive of Friends of the Earth Scotland, expressed his disappointment over the decision.
He said: "Carbon capture and storage is one of the critical bridging technologies needed if the world is to put climate changing emissions into an irreversible decline with the next 15 years - which we must do if we are to avert climate chaos.
"The UK Government has once again shown itself obsessed with reviving the polluting nuclear power industry, so it is hardly surprising to hear that other methods of tackling climate change will be shunned."
Mr McLaren added: "One can only hope that current proposals to boost renewables or energy efficiency do not meet a similar same fate."
Scottish Liberal Democrat leader Nicol Stephen said: "This is a huge disappointment. The UK Government simply did not act quickly enough to make this opportunity a reality."