Planktos, a company that had planned to seed the ocean with iron to increase the growth of carbon-dioxide-eating plankton, has officially given up on the idea.

The company, traded on the Pink Sheets under the symbol "PLKT," on Wednesday announced it intends to focus on new business opportunities "in light of recent developments connected to carbon sequestration that make further present efforts in this arena too speculative."

The news is hardly a big surprise.

In February, the company halted a planned project when it failed to raise enough financing (see The New York Times and the Silicon Valley/San Jose Business Journal).

The now-defunct Web site blamed the shutdown on a "highly effective disinformation campaign waged by anti-offset crusaders," according to the Times.

Planktos had hoped to trigger plankton blooms, which occur naturally in the ocean, with iron dust and to sell carbon credits based on the carbon-dioxide emissions the plankton would remove. But a number of environmental groups and scientists opposed the idea, citing a need for more information about the risks and benefits of growing more plankton. 

Nathaniel Bullard, a senior analyst at U.K.-based research firm New Energy Finance, said having its main pilot attempt shut down probably made it "very difficult" for Planktos to keep going.

"Their product was emissions reductions, so if they didn't get past the proof of concept, then they couldn't monetize what they were going to do and there wasn't, in that structure, a way for them to make money," he said.

One problem was the difficulty of testing the concept in real conditions to ensure that it actually reduced emissions, he said.

For example, it's unclear how quickly the plankton would be recycled back into the atmosphere, he said.

"Do the organisms rapidly expire and quickly sink outside of the carbon cycle, or are they metabolized again and end up in the atmosphere?" he said. "I don't know that that's ever been conclusively proven, and the [European Union] treated it effectively as pollution."

The idea that iron dumping could be viewed as pollution made it challenging to test the concept at a significant scale outside of a lab, he said.

Industry insiders are likely to wonder how the Planktos news will impact Climos, another startup pursuing the same idea.

Climos has said it is raising $10 million to $12 million, with half of the funding already committed as of May (see Climos Seeks $10M to $12M to Fertilize Ocean and Funding Roundup: SunEdison Snags $161M). Bullard said that the U.S. Securities and Exchange Commission filings disclose nine unnamed private investors – eight from California and one from Massachusetts.

The company in March announced it had raised $3.5 million in seed funding from Braemar Energy Ventures and Elon Musk, a PayPal co-founder who also has backed private space-exploration company SpaceX and electric-car startup Tesla Motors (see VentureBeat post).

The Planktos news could make investors more wary of the ocean-fertilization concept, Bullard said.

But venture investment could help make the idea successful, if Climos succeeds in raising it, he added.

"Venture investors might be more helpful; they might find people who are more patient and who take a longer view on things [than public shareholders], and the investors might be able to have a great deal more oversight on what the company is doing prior to commercialization," he said.

Taking a lesson from the Planktos story, Bullard recommends a more methodical approach to commercialization.

"If Climos is willing to approach it in a very clinical sort of trial - a slow and steady proof of concept – then it might be proven robustly as a concept," he said. "As [a concept that attempted to] sort of quickly commercialize before there had been any real serious testing, it ran into necessary skepticism from environmental groups and environmental regulators."

Meanwhile, Planktos is hoping to move on. But it apparently hasn't yet decided what to do next.

According to the announcement, the company has suspended operations "in order to seek out an alternative near-term business opportunity" after having spent the past three years researching and developing land and ocean carbon-sequestration methods.

Transitioning the business will require a restructuring of the company, including a name change, a consolidation of stock and an acquisition, all of which are subject to shareholder approval, Planktos said, adding that it is renewing financing efforts to obtain working capital.

The news didn't move the stock, which has been trading at a penny since falling from 2 cents per share Tuesday. The company has been worth less than 10 cents per share for all of 2008 so far, down from a 52-week high of $1.08 per share in August of 2007.