The government has launched a final attempt to simplify the much-criticised Carbon Reduction Commitment (CRC), publishing proposals that could cut administrative costs by up to £330m for the 2,000 organisations taking part in the green tax scheme.

The 12-week consultation follows an announcement in last week’s Budget that the Treasury would axe the CRC and introduce a simpler green tax system if the current scheme could not be simplified within the next six months.

“We have listened to business concerns about the CRC and have set out proposals to radically cut down on ‘red tape’ to save businesses money,” said energy secretary Ed Davey, launching the consultation.

“The benefits of the scheme are clear, though. It will deliver substantial carbon savings, helping us to meet carbon budgets, and it encourages businesses to take action to improve their energy efficiency.”

As expected, the consultation includes proposals to reduce the amount of reporting required by businesses and the length of time participants will need to keep records.

The Department of Energy and Climate Change (DECC) also hinted it could scrap the unpopular Performance League Table, which is designed to provide a reputational driver for firms to improve their environmental impact.

The league table has been widely criticised by organisations, which argue it fails to recognise carbon reduction efforts made by companies before the scheme began.

Many firms have also complained about the CRC’s complexity and the fact the government changed the scheme so that revenues raised were not recycled to the best-performing companies as originally planned, but instead retained by the Treasury.

The government estimates the package of changes could reduce the administrative costs for businesses by about £250m, with savings includin the public sector reaching £330m by 2030.

If the government decides to retain the CRC, any changes will come into effect in the second phase of the CRC in April 2013.

However, businesses urged the government to scrap the CRC immediately, warning that any changes to the scheme would have little impact.

David Symons, director of consultancy WSP Environment & Energy, said the consultation was almost identical to the changes the government announced in summer 2011.

“Instead of tinkering with CRC rules and heralding these as significant changes, the government would do better to really focus on how it can help and encourage businesses to reduce their energy bills,” he said.

“Government forecasts show that companies have spent large sums getting to grips with the new rules already, and that these administration costs will decline quite steeply in the future, even if the rules don’t change.”

He also joined a chorus of businesses that have today slammed the government for failing to make a decision on whether to introduce mandatory reporting for greenhouse gas (GHG) emissions.

“If the government does want to go further to reduce administration costs, similar but much simpler outcomes could be achieved by increasing levies on energy use and creating a league table from the introduction of mandatory carbon reporting,” he said.

“It’s regrettable that Defra has today announced it is still deliberating on this aspect.”

Similarly, Guy Newey, senior research fellow at think tank Policy Exchange, urged DECC to scrap the CRC.

“While the apparently never-ending efforts to simplify the CRC continue, the most sensible step would be to scrap this burdensome, over-complex scheme,” he told BusinessGreen.

“Its aims – to make senior managers more aware of the potential for cost-effective carbon reductions and energy efficiency – could be more easily achieved through mandatory reporting and a flatter carbon price across the business sector, perhaps through reform of the Climate Change Levy.”

However, consultancy KPMG, which produced the report for DECC to assess the administrative costs of the CRC, said the proposals would help reduce the burden on firms, while maintaining carbon reduction levels.

Ben Wielgus, lead adviser on CRC at KPMG in the UK, said CRC is currently adding about five per cent on to the cost of carbon for businesses.

“Our survey suggests total administrative costs of £97m across all 2,779 participants in year one, and £172m for all of phase one,” he said.

“But we expect these costs to drop as participants become more efficient at complying with the scheme. On average this means that participants are paying £15,500 a year for administrative costs of the scheme… and it adds about five per cent to the cost of carbon for businesses.”