A leading academic last night blamed the government for BP's decision to pull out of a multimillion-pound green energy project in the north-east of Scotland.

Professor Stuart Haszeldine, of Edinburgh University's school of geosciences, said ministers at Westminster had continually "found problems rather than solutions" since the oil giant first announced its intention to go ahead with the Peterhead carbon capture and storage (CCS) scheme.

Under the £500m project, which would have brought 1000 construction jobs to the economically-deprived area, BP would have extracted hydrogen from North Sea gas to fuel a power station. The remaining carbon dioxide would have been pumped into the depleted Miller oilfield instead of being dispersed into the atmosphere.

Alastair Darling, the Trade and Industry Secretary, announced on Wednesday that the competition to win Britain's first CCS contract would begin in November and a final decision would be taken next year.

BP said it could not wait that long and decided to pull out of the project, which would have been the first of its kind in the world.

Although Mr Darling yesterday insisted he was simply following due process, Prof Haszeldine said the government had dragged its heels and missed a chance to lead the world on tackling climate change.

"With carbon capture and storage, each consultation has led to a three-month gap followed by another consultation and another three-month gap - it's delay after delay," he said.

"BP are doing what they said they would do all along if they didn't get enough government support - they said they would walk and they have walked.

"If we want to attract leading developers to get on with this we need to make it more attractive for them to come here, but the government has failed to do that. They have found problems rather than finding solutions."

Politicians and environmentalists were also severely critical of the government.

Stewart Hosie MP, SNP Treasury spokesman, said: "The government must explain their actions and try their utmost to salvage this project. Scotland cannot miss this once in a generation opportunity to take the lead in potentially planet-saving technology."

Alex Johnstone, a Conservative list MSP for North East Scotland and the party's spokesman on climate change, said: "This project had provided one of the best opportunities for the world's first full-scale demonstration of carbon capture and storage.

"There was a risk that the Labour government's refusal to provide clear signals for investment would result in this unique opportunity being lost. That is exactly what has happened."

Duncan McLaren, chief executive of Friends of the Earth Scotland, said BP's decision was "extremely disappointing".

He added: "The UK government has once again shown itself obsessed with reviving the polluting nuclear power industry.

"One can only hope that current proposals to boost renewables or energy efficiency do not meet a similar same fate."

BP first announced its plans for Peterhead in July, 2005. The following year, Chancellor Gordon Brown announced in his pre-Budget report that a decision on whether the government would support a CCS demonstration plant would be made in 2007.

Mr Brown announced in this year's Budget in March that there would be a competition for the contract and Mr Darling this week confirmed it would begin in November.

Mr Darling said yesterday: "I just can't hand over a contract to one company. I would have liked to have see this work done in Scotland.

"The only way I could have met BP's target is to have given them the contract - and I would have been open to challenge from all the others."