CONTROVERSIAL plans to produce gas by burning coal under the Firth of Forth have been put on hold owing to uncertainty over Scottish Government support for the project.

Cluff Natural Resources, the company behind the scheme, said in a statement it was postponing a key planning application until "the political situation is more certain".

The move, announced in a statement reporting the company's latest financial results, prompted claims the economy was losing out because SNP ministers were sending "mixed messages" over unconventional gas extraction.

In his statement, the company's chairman and chief executive Algy Cluff cited pressure on the Scottish Government to broaden its moratorium on fracking to include underground coal gasification (UCG), the process it wants to use under the Forth.

He also warned a Scottish Government inquiry into the country's energy needs, due to report next month, and the Holyrood election next May were factors "which have the ability to impact the development of the Kincardine Project".

"Accordingly we have deemed it prudent to await clarity on these matters before committing fully to, in particular, the expense of an Environmental Impact Study.

"As a result, work on a planning application will likely be postponed until after such time as the political situation is more certain," the statement added.

Mr Cluff said it remained the company's "avowed intention" to seek planning permission for an initial pilot project "as soon as is practicable".

He said preparations, including designing and choosing a site for onshore facilities were well underway.

Cluff Natural Resources had planned to submit its planning application early next year.

Opponents of UCG, who claim the process is potentially more harmful to the environment than fracking, have been calling on the Scottish Government to include it in its moratorium on fracking.

They include a number of new MPs who campaigned during the election under the "Frack Off" banner adopted by the SNP.

Ministers have so far refused but are likely to face fresh calls at the SNP conference in October, when the party's 15,000-strong trade union group will also demand a blanket ban on fracking.

Ministers have promised to commission new research and hold a public consultation before they make a final decision on the future of unconventional gas in Scotland.

Murdo Fraser, the Scottish Conservative MSP, said: "Once again the SNP have been caught out sending mixed messages on energy policy.

"We know Scottish Government ministers have been quietly encouraging of the potential for UCG but many in the party are vigorously opposed.

"It is a great pity that this policy confusion means a technology that could have great potential for Scotland is now on the back burner for the foreseeable future and workers will be losing out on the eventual benefits."

A spokesman for the Scottish Greens, who have opposed UCG, said: "In recent months communities around the Forth have made their opposition to coal gasification clear so it’s no surprise Cluff have got cold feet.

"Cluff say they want certainty when it’s local communities that deserve certainty.

"The Scottish Government must include coal gasification in a permanent ban of unconventional gas extraction."

The Scottish Government failed to respond to a request for comment.