Jamestown has been relegated to the backup site for a demonstration “clean coal” project, disappointing the city’s public utility and a senator but drawing praise from environmentalists and a local citizens group.

Praxair, a Danbury, Conn.-based industrial gas company with a plant in the Town of Tonawanda, had designated Jamestown as the primary site for the project. But last month, the Energy Department raised questions about its size, financing and the area’s geology.

The company’s decision to make Holland, Mich., its top priority dims the hopes of supporters for a 50-megawatt carbon capture and storage technology plant in Jamestown that has been on the drawing board since 2003.

But they’re not giving up yet. “I conveyed directly to Steve Angel that I was ready to use all my influence to support the Jamestown project,” Sen. Charles E. Schumer, D-New York, said in a statement, referring to Praxair’s chief executive officer. “I told him that all the supporters felt the Oxy-Coal project was superior and that we wanted the Jamestown project to be listed as their No. 1 priority. . . . “I will continue to press Praxair to see if there is any way to alter this decision.”

The Energy Department has $2.3 billion in economic stimulus funds for demonstration projects involving emerging technologies that can capture carbon dioxide from coal-burning power plants.

Citing support from Schumer and Gov. David A. Paterson, Dave Leathers, general manager of the Jamestown Board of Public Utilities, held out hope of reversing the decision.

“Just because one communication has occurred at this time doesn’t mean everything is done and over. We hope to change their minds,” Leathers said.

Opponents hailed Praxair’s decision. “I hope this is the death knell of this awful project,” said Walter Simpson, co-founder of the Western New York Climate Action Coalition, one of more than a dozen groups opposing the Jamestown project.

Simpson and other critics cite economic and environmental reasons in disputing the need for building a $400 million to $500 million coal plant.

“Praxair made the right decision. This project is not viable,” Simpson said. “We’re not against carbon capture and storage, but we think the demonstration project should be on an existing plant, rather than being used as a rationale for building an unneeded coal-fired power plant.”

The Jamestown Board of Public Utilities has disputed the costs and says the project would be good for the city’s energy needs and the country’s search for cleaner coal technology.