That means it is on course to meet its 2010 target of 4.4 million tonnes, but with Britain's carbon dioxide emissions for 2007 at 543.7 million tonnes, the committee said there is plenty of work to be done to get businesses to cut emissions.

"This target is a small contribution in the context of increasing global energy costs and increased public awareness of climate change," said committee chairman Edward Leigh in a statement.

"The Carbon Trust could deliver more, but further progress depends upon contacting greater numbers of organisations without a corresponding increase in costs or a breach of the European State Aid rules."

The Committee of Public Accounts report said the Trust's work is made harder because small businesses remain unconvinced that energy efficiency makes commercial sense.

"The Carbon Trust also needs to overcome the reluctance of some senior business executives to prioritise emissions reductions as a business issue," added Leigh.

"The Carbon Trust must provide evidence to the contrary and also aim to assist more eligible small businesses under its interest free loan incentive scheme."

A climate change bill currently going through parliament and expected to become law within three months sets the government a legally binding target of cutting emissions of carbon dioxide by 26-32 percent by 2020 and 60 percent by 2050.

(Reporting by John Joseph; Editing by Steve Addison)