The Carbon Reduction Commitment could potentially be replaced by an “alternative environmental tax” if it can’t be simplified, Chancellor George Osborne announced today.

Unveiling details of the Budget for 2012, Mr Osborne criticised the CRC, introduced by the Labour Government in 2008, for being “cumbersome” and “bureacratic” and suggested he wanted to lighten the burden on businesses.

Under the mandatory CRC Energy Efficiency Scheme, large public and private sector organisations such as supermarkets, water companies, banks and local authorities must report on their energy use and emissions. If they do not comply with the scheme they face fines and other penalties.

The Chancellor said: “The Carbon Reduction Commitment was established by the last government. It is cumbersome, bureacratic and imposes unnecessary costs on business so we will seek major savings in the administrative cost of the commitment for business.

“If those cannot be found I will bring forward proposals this Autumn to replace the revenues with an alternative environmental tax.”

DECC will be bringing out full details of how they want to simplify the CRC next week and a formal consultation will be launched to give businesses a chance to have their say.