Removing tax relief for companies that invest in biofuels will further alienate small firms, it has been claimed.
According to the Forum of Private Business (FPB), abolishing the 20p per litre fuel duty incentive for those who commit to using bioethanol and biodiesel will save the treasury around £550 million, but hit small firms in the pocket.
Phil Orford, the FPB's chief executive, said: "It would appear that this government intends to remove an attractive incentive and replace it with another regulatory control.
"There appears to be a future strategy of using the stick rather than the carrot to implement green initiatives."
He added that the change would mean that firms struggle with more red tape, as well as removing any financial incentive for going green.
Mr Orford also accused the government of addressing long-term issues with "short-term, cost-saving policies."
Last month, Dunae Jackson, managing director of KashFlow, claimed that the tax burden faced by smaller firms means that they find it hard to expand.
