A $60 million project to extract renewable energy from the hot bedrock deep beneath Basel, Switzerland, was shut down permanently on Thursday after a government study determined that earthquakes generated by the project were likely to do millions of dollars in damage each year.

The project, led by Markus O. Häring, a former oilman, was suspended in late 2006 after it generated earthquakes that did no bodily harm but caused about $9 million in mostly minor damage to homes and other structures. Mr. Häring is to go to trial next week on criminal charges stemming from the project. On Thursday, he did not respond to messages asking for comment.

The findings are a serious blow to the hopes of environmentalists, entrepreneurs and investors who believe that advanced geothermal energy could substantially cut the world’s use of emissions-causing fossil fuels. The report comes as the United States Energy Department is preparing its own review of the safety of a closely related project, by a start-up company called AltaRock Energy, in the hills north of San Francisco.

The AltaRock project is the Obama administration’s first major test of advanced geothermal energy. Like the Basel project, AltaRock’s plan is to drill miles underground, fracture hot bedrock and circulate water through it to generate steam. The Energy Department began its review after an article in The New York Times in June raised questions about whether AltaRock had been forthcoming about the earthquakes set off by the fracturing in Basel. The AltaRock project has also been plagued with technical problems.