Cluff Natural Resources has shelved plans to drill for unconventional gas under the Firth of Forth and will shift its focus to projects outside Scotland.

The energy giant had planned to build the UK’s first deep offshore underground coal gasification (UCG) plant at Kincardine in Fife, but its plans were put on hold last year in November ahead of the Scottish government imposing a moratorium on UCG over environmental concerns.

Cluff said it had now stopped all expenditure related to the project.

The company, which holds nine UCG licences across Scotland, England and Wales, claimed the £250 million scheme (€336m) could generate £603m (€810m) for the economy and create 1,000 jobs.

In a statement, Cluff commented its decision :

“While the company is confident that the evidence in relation to UCG will result in the moratorium being lifted, it has stopped all expenditure related to the Kincardine project and is now focusing its attention outside of Scotland, in particular the north-east of England, where the company believes the political situation is more favourable with regards to UCG and considerable support exists for investment in energy and industry with a view to regeneration.”

UCG is an unconventional method of producing gas from coal seams deep underground.

Its supporters argue it is a new and cleaner way of extracting the estimated 85% of the world’s coal reserves that are too deep to mine using traditional techniques.

On the other side, its opponents explain Fife would be used as a testing ground for the largely untried process, which could have consequences if toxic gases leak into Fife’s rising mine water.

According to Dr Harry Bradbury, founder and chief executive of UK clean energy company Five Quarters, this process results in 20% of the CO2 produced from traditional coal mining.