A controversial project to turn coal into liquid fuels in southwest Ohio has been abandoned by way of a negotiated settlement, amid legal challenges by environmental groups over pollution permits and questions about the ability of owner Baard Energy to secure financing.

As the first coal-to-liquid refinery to be awarded pollution permits in the U.S., the settlement may have dealt a blow to the broader industry, underscoring problems with the expensive and polluting process that once thought to provide a viable alternative to petroleum-based liquid fuels.