The federal government has cancelled a program that helped businesses to conduct energy audits to pinpoint areas where they could reduce their emissions of greenhouse gases.

The Industrial Energy Audit Incentive, a program administered by Natural Resources Canada, provided businesses with up to 50 per cent of the cost of an energy audit since 2001.

More than 700 companies in Canada took advantage of the program in the past six years.

Carol Buckley, spokesperson for Natural Resources Canada, said instead of the former program, the government will provide grants to companies to help them buy the materials they need to be more energy efficient. The grants will be limited to companies with fewer than 500 employees.

"Because the projects are smaller, we think they need less help at the front-end with planning, and we prefer to put our money into the implementation, which is where organizations that are small often lack resources," she said.

"Our changes are only meant to improve the effectiveness of what we do in terms of saving energy."

But Liberal MP Mark Holland, critic for natural resources, said the decision to cancel the program is similar to a decision last year to cancel the EnerGuide for Houses program. That program was replaced with the new ecoENERGY retrofit program recently announced.

"Every time that they cut, they bring it back in a smaller portion, and try to relabel it. The reality is, it's less effective," Holland said.

Environmentalists have said the new ecoENERGY program is about half the size of the EnerGuide for Houses program.

Holland said Natural Resources is forced to make such choices because the Harper government has reduced the overall pool of money available to help individuals and businesses cut their emissions of greenhouse gases.

According to the website of Natural Resources Canada, under its Office of Energy Efficiency page, the $220 million ecoENERGY Retrofit program applies to homeowners and to smaller businesses and organizations.

It provides a financial incentive of up to 25 per cent of project costs to a maximum of $50,000 to help small and medium commercial and institutional buildings and industrial facilities roll out energy saving projects.

The government's ecoENERGY initiative also includes a $20 million ecoENERGY for Industry program that aims to encourage energy saving investments and the exchange of best practices among industries in Canada.