1.  The Carbon Trust appears likely to meet its 2010 target of an annual reduction in carbon dioxide emissions of 4.4 million tonnes, but the target was not a particularly challenging one in the context of the Department's overall target to reduce emissions by 118 million tonnes a year by 2010. As energy prices rise and public awareness of the need to tackle climate change increases, the Department should identify ways in which the Carbon Trust's contribution could be greater.

2.  By the end of 2006-07 businesses and public sector organisations had implemented less than 40% of carbon dioxide savings identified by the Carbon Trust over the period 2003 to 2006. Cost was seen as a significant barrier, particularly for smaller businesses with limited access to capital, and many management boards had yet to be convinced of the commercial benefits of implementation. The Carbon Trust should:

• require its account managers to collate data on typical energy costs in each key business sector to strengthen the evidence base used to demonstrate to business leaders the commercial benefits of improved energy efficiency; and
• review its financial support incentive of 100% interest free loans for smaller businesses, to enable it to assist more eligible businesses within its funding constraint through partial as well as full support measures.

3.  Institutional investors and other shareholders would be more likely to support implementation of the Carbon Trust's recommendations to improve energy efficiency if they could be shown to enhance long term share values. The Carbon Trust should raise the profile and impact of its Energy Efficiency Accreditation Scheme, which enables businesses to derive commercial benefit from marketing their actions to reduce carbon dioxide emissions, by:

• using future marketing campaigns to raise public awareness of the scheme;
• linking accreditation to implementation of the Carbon Trust's recommendations; and
• encouraging accredited organisations to display the logo in subsequent marketing campaigns.

4.  Increasing the uptake of energy consultancy services by businesses depends upon empowering private sector specialists to contact organisations and build closer working relations. The Carbon Trust has to restrict the frequency of consultancy commissions to stay within the Department's funding. With a typical cost of £435 a day for a standard survey and £700 a day for more specialist advice, businesses already pay a proportion of the consultancy costs in some circumstances. The Carbon Trust should explore a franchising model that would enable accredited consultants to build closer working relations with businesses whilst retaining the credibility of the Carbon Trust's expertise.

5.  The need for public funding of energy efficiency advice should decrease as public awareness of climate change and energy prices increase. The Carbon Trust should develop an exit plan to scale back its advice work over the next five to ten years, setting out:

• clear trigger points for the Carbon Trust and the Department to determine when it might be appropriate to reduce public funding, taking account of the stability and growth of the private sector energy consultancy market; and
• an objective review process to examine the need for ongoing funding involving representatives from the Carbon Trust, the Department for Environment, Food and Rural Affairs, other government sponsors, and the market.

6.  An approach targeted at those businesses or sectors responsible for large scale carbon dioxide emissions would bring benefits, but compliance with European Union rules on State Aid may restrict the Carbon Trust's ability to do so. The Carbon Trust should record cases where State Aid rules may have hindered the efficiency of efforts to reduce carbon dioxide emissions and the Department should then engage with the European Commission to discuss whether the limitations can be overcome.

7.  In successfully leveraging private sector investment in emerging low carbon technologies, the Carbon Trust has adopted practices consistent with the venture capital market. However, a runaway success in one of the fund investments could leave the Carbon Trust open to criticism if its fund managers make considerable returns. The Carbon Trust should regularly review such remuneration arrangements for fund managers with market rates in the private sector to confirm that the package helps the retention of experienced staff and the maintenance of investor confidence, whilst also protecting the public purse.