Launching a 12-week consultation on 27th March, against a backdrop of business despondency, Mr Davey said “we have listened to businesses’ concerns about the CRC and have set out proposals to radically cut down on ‘red tape’ to save businesses money”.

This follows an announcement made in last week’s Budget announcement that the CRC would be scrapped and replaced with a less cumbersome green tax system – if it government failed to simplify it within six months.

Under the changes, DECC says that businesses will see their administrative costs cut by almost two-thirds, resulting in savings of about £330m up to 2030.

However, many large businesses say they would rather see the complex mandatory trading scheme scrapped altogether and replaced with a new system.

Director of Energy Solutions, Nick Grogan said: “With energy costs likely to continue climbing, the Government should be doing more to help businesses become more efficient, not punishing them with what is in reality just another tax.”

“They would do better to encourage companies to use CRC as an opportunity to cut costs and use the money raised to fund new initiatives such as The Green Deal.”

Mr Davey said: “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”., the consultation includes proposals to reduce the amount of reporting required by businesses and the length of time participants will need to keep records.

Key proposals for the simplification package include: a shortening of the CRC qualification process and a reduction in the amount of reporting required by businesses.

The consultation is set to run for 12 weeks from 27th March and businesses are invited to comment on the proposals. Following on from this legislation for CRC will be amended by April 2013.

The appeal, lodged by government earlier this year to the Court of Appeal, follows High Court action which argued government plans to cut FIT incentives by as much as 50% from December 12 2011 – and ahead of a formal review were illegal.

The High Court agreed, and a ruling was given on December 21 which stated the controversial cuts to solar incentives were “unlawful”. However, DECC, acting under former energy secretary Chris Huhne, then made the decision in January to lodge an appeal against the ruling.

As a result of this final ruling, companies and households that installed the panels before the March 4 will now receive the full payback from the tariffs. It is also hoped it will finally end months of uncertainty for the industry.

Despite welcoming the final decision, campaigners have warned that as a result of the Government’s “illegal” action that the UK’s renewable market growth has been affected and jobs already lost.

The so-called Carbon Reduction Commitment (CRC) was devised under the previous Labour government, and dramatically rewritten in 2010.

The mandatory energy efficiency scheme forces businesses like banks, hotels, hospitals and schools to help cut Britain’s greenhouse gas emissions by 4 million tonnes and corporate energy bills by 1 billion pounds a year by 2020.

The CRC has been widely criticised for being too costly, confusing and unfair.

“The Carbon Reduction Commitment is cumbersome, bureaucratic and imposes unnecessary costs on business,” Osborne said.

“We will seek major savings on the administrative costs and if that cannot be done we will replace the revenues with an alternative environment tax.”

Osborne did not disclose details about the type of environment tax which might be considered.

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