The Carbon Trust has been told it must “do a lot better” by a cross party parliamentary committee.
A report by the Committee of Public Accounts said it still had to make the environmental case effectively to win over business.
The trust insisted it was meeting targets and was having an impact on business by showing companies how 'cost savings' could be achieved through a low carbon approach.
But, committee chairman Edward Leigh MP said: 'The UK government has a target for reducing carbon dioxide emissions by 118 million tonnes a year on 1990 levels by the year 2010. The Carbon Trust is on track to meet its own 2010 target but that is an annual reduction in emissions of only 4.4 million tonnes.
“The Trust's contribution is pretty small beer. It can surely do a lot better, especially given soaring fuel prices and the consequent public desire to cut energy use. Now is the time for the Carbon Trust to get out there, work with businesses and other bodies and persuade them to cut their emissions.”
Mr Leigh said the trust had successfully encouraged the private sector to investment in low carbon technologies, but many smaller companies still needed to be convinced that improving their energy efficiency makes commercial sense.
He added EU laws might be preventing the trust from approaching public bodies and large businesses which might be responsible for the highest emissions and urged the trust to highlight the issue to the Department for the Environment, Food and Rural Affairs if necessary.
The Carbon Trust was established in 2001 as a private company limited y guarantee to help businesses and public sector organisations to reduce their carbon dioxide emissions and to support the development of commercial low carbon technology.
In 2006/2007 it received £100.2 million from Defra and the Department of Business, Enterprise and Regulatory Reform.
The trust is now examining how to extend its reach into smaller businesses and deliver advice to this sector in a more efficient manner. MPs have suggested the Carbon Trust must show that it can provide a service which cannot be offered by any other private sector body.
Another issue highlighted by the committee included the need to overcome “the reluctance of some senior business executives to prioritise emissions reductions” and invest in “new more energy efficient equipment”.
The committee also told the trust to make greater use of its Energy Efficiency Accreditation Scheme to enable businesses to market initiatives taken to reduce carbon dioxide emissions. MPs argued this could shift customer preferences and increase the likely return on energy efficient investments.
The Carbon Trust responded: '“We welcome the findings of the PAC, in particular the recognition that we are on track to help our customers save 4.4 million tonnes of carbon a year by 2010, meeting the expectation set out in the Government’s Climate Change Programme.
'Far from being ‘small beer’, by 2010 our work with business will, every year, be saving more than the entire current carbon emissions of Glasgow.
'Furthermore, our work generates significant cost savings for business too. Our work last year alone will generate direct cost savings to business of up to £650 million.
'Since we were established we have worked with tens of thousands of businesses and have helped our customers generate carbon savings of more than 13 million tonnes.
'In addition, we calculate our innovations, investments and enterprises activities could lead to further significant annual savings of between 13.7 and 20.7 million tonnes of carbon dioxide every year by 2050.
“The committee report follows on from the National Audit Office report last year which found we offer value for money in helping businesses reduce their carbon emissions. The PAC also recognises the success of our encouragement of private sector investment.'