NRG Energy Inc (NRG.N: Quote, Profile, Research) and New York state on Wednesday canceled plans to build a clean-coal power plant, citing rising costs and calling the project "ahead of its time."

In a statement, NRG said the New York Power Authority informed the energy company that it would allow their alliance for a near-zero emissions coal plant to lapse on July 22.

"Authority staff is not in a position to recommend to its Board that it enter into negotiations for a final purchase power agreement," New York Power Authority spokeswoman Christine Pritchard said in an e-mailed statement. "The economic, technical and regulatory obstacles are too great to warrant further efforts at this time."

The announcement was the latest blow to efforts to gasify coal for underground storage of carbon dioxide emissions, which contribute to global warming.

Earlier this year, the U.S. Department of Energy pulled funding for the $1.8 billion FutureGen clean-coal project, citing the technology's ballooning price tag.

The alliance between NRG and NYPA was formed in 2007 to build a plant in Erie County, in western New York state.

"We are disappointed in the state's action today, but we recognize that the necessary funding was not there," NRG Chief Executive David Crane said, adding that the "project was, in many ways, ahead of its time."

Coal-fired power plants generate about half of U.S. electricity supplies, and account for about 40 percent of U.S. greenhouse gas emissions -- the single biggest industrial source.