BP has abandoned plans to build a pioneering plant to capture and store carbon dioxide in Australia, the second such project the company has axed.

The Australian plant was part of a joint venture with Rio Tinto, called Hydrogen Energy.

The companies wanted to build a coal-fired power plant and store the resulting carbon dioxide underground nearby, in a saline aquifer. But they said the geological formations were unsuitable to the long-term storage of the gas.

BP said: “We wanted to be absolutely certain we had the right geology before we went ahead, because this would be the first project and would be a proof of concept.”

The groups had spent tens of millions of dollars on the project, which had been in planning for several years.

BP pulled out of a similar project last year, at Peterhead in Scotland, in which it had invested $60m.

The company said the Peterhead plant was not viable without greater government subsidies.

BP said it was still committed to developing carbon capture and storage technology.

The company’s green commitments were thrown into doubt when Tony Hayward took over as chief executive from Lord Browne, who had made low-carbon energy a priority.

Mr Hayward said in February he wanted to find partners for, or sell a stake in, the group’s renewable energy portfolio, valued at $7bn (£3.57bn).

Hydrogen Energy has two remaining projects, one in California and the other in Abu Dhabi. In both cases, the carbon dioxide would be stored in old or depleted oil and gas fields.

BP has a separate joint venture, running since 2004, in Algeria with Statoil and Sonatrach, the Algerian energy company, whereby carbon dioxide is stripped from natural gas and pumped back underground.

Governments have been pinning their hopes on carbon capture and storage as a way of allowing companies to carry on burning fossil fuels while protecting the planet from climate change.

Most such projects are at an early stage, and the process is expensive.