ZeroGen, a joint state-federal government and industry-led research project into carbon capture technology for coal-fired power production, was touted as providing a possible model for a sustainable low-emission coal industry.

Construction Forestry Mining and Energy Union spokesperson Tony Maher reportedly said the announcement by Queensland Premier Anna Bligh showed the government was not committed to supporting the mining industry's future.

“The Bligh government's decision is morally bankrupt,” he told the ABC.

“The Queensland government makes a fortune out of the Queensland coal industry.

“It recently made billions in the sale of QR [National and] it continues to make billions from royalties and yet it won't invest in the future of mining communities.”

Maher, who recently resigned from the board of power company Eraring after opposing the New South Wales government’s decision to privatise the state’s electricity assets for $5.3 billion, said the move put mining jobs at risk.

“There's no future for high-emission coal power production – the only future is low emissions,” he said.

“Unless they work out very quickly a means of producing power using coal, without the emissions, then there is not a long-term future for that industry.”

Bligh said the government was not “about to walk away from carbon capture and storage technology”, but would be “changing the focus of our efforts”

“We embarked on this research program because Queensland is one of the world's major coal-producing regions,” she said.

“It is in the best interests and prosperity of future generations that we develop this clean coal technology and the research we have carried out to date has made us world leaders in this field.

“We had hoped to have a clean coal power station up and running by 2015 but the fact is that the early research has shown us that this is not viable at this time on a commercial scale.

“The Queensland government will work with the coal industry over the next three years to prioritise suitable storage in Queensland that would support the construction of an integrated power plant with CCS.”

The state’s auditor general said the government should pull out of the project because it was too “speculative”

Federal Resources Minister Martin Ferguson said yesterday he was disappointed because the federal government had been lobbied hard by the state to financially support the project. The federal government had invested $47.5 million towards a prefeasibility study for the plant.

"The Queensland government cannot have its cake and eat it too, profiting from exports while being unwilling to invest in the R&D necessary to reduce emissions," The Herald Sun quoted him as saying.

Bligh said $50 million of government money, leveraging a further $100 million from industry and the federal government, would remain in the Clean Coal Fund to assist companies such as ZeroGen to compete for funding for the development of CCS in Queensland.