E.ON, the energy group, tonight effectively threw in the towel on its plans to build a new coal-power station at Kingsnorth, blaming the recession.

Five of the 'Kingsnorth Six' at the top of the 200m chimney. (Courtesy: Greenpeace.org) In a heavy blow to the government's plans to promote energy from coal, E.ON said lower demands for electricity due to the recession had pushed the need for the new plant in the UK to around 2016.

The company said, however, that it remained committed to the development of cleaner coal and carbon capture and storage "which we believe have a key role to play alongside renewables, gas and nuclear in tackling the global threat of climate change while ensuring affordability and security of energy supplies".

While the company described the decision as a postponement, the announcement effectively scuppers the whole project, green groups said.

Kingsnorth has been shrouded in controversy ever since inception, with protests over several years including a high-profile Climate Camp protest.

Six Greenpeace protesters who climbed the smokestack at the plant were later acquitted after the jury accepted the plant posed a greater threat than the activities of the activists.

Environmentalists hailed the decision as a victory against dirty coal.

"This development is extremely good news for the climate and in a stroke significantly reduces the chances of an unabated Kingsnorth plant ever being built," said Greenpeace executive director John Sauven.

"The case for new coal is crumbling, with even E.ON now accepting it's not currently economic to build new plants. The huge diverse coalition of people who have campaigned against Kingsnorth because of the threat it posed to the climate should take heart that emissions from new coal are now even less likely in Britain."

He added: "Ed Miliband [the environment secretary] now has a golden opportunity to rule out all emissions from new coal as a sign of Britain's leadership before the key Copenhagen climate meeting. With E.ON's announcement he's now got an open goal."

E.ON insisted that the Kingsnorth project was not dead and its decision stemmed from specific economic decisions.

"Kingsnorth is not dead at all," said Jonathan Smith, an E.ON spokesman. "The application was made in 2006 and no one could have foreseen the fall in demand and the drop in wholesale prices. Demand has fallen so much because of the recession that there is no need for a new plant."

E.ON also pointed out that it has yet to receive government permission to go ahead with the project.