Nicolas Sarkozy, the French president who vowed to try to "save the human race" with a tax on carbon, was today accused by his junior ecology minister of pandering to "eco-scepticism" after the reform was in effect abandoned by the government.

Chantal Jouanno made no secret of her fury after the prime minister, François Fillon, said the government would not "sink the competitiveness" of French businesses by inflicting a tax on them that was not paid by their EU counterparts.

"I am in despair over this step back, in despair that eco-scepticism has defeated it," said Jouanno. "I am not onside with this decision."

Following his party's defeat at the recent regional elections, Sarkozy has been under pressure to remove some of the more contentious elements of his reformist agenda. But, while today's announcement provoked relief from many on the right, Jouanno was stinging in her criticism.

"It was possible to have done it in France before doing it in Europe," she said. "It was what we had thought from the beginning; it was what other countries like Sweden have done."

A spokesman for Fillon said the government was not killing off the reform but was explaining that it would have to be implemented at a pan-European level to be fair. However, observers said the tax had in effect been shelved. "It's called kicking it into touch," Jacques Le Cacheux, an economist, told L'Expansion.com. "The government knows very well that at the moment a European carbon tax is not envisaged."

Diplomats say one of the countries most opposed to such a move is Britain.

Once hailed by Sarkozy as a key weapon in the fight against climate change, the carbon tax has been in doubt ever since France's constitutional court rejected it hours before it was due to come into effect at the start of the year.

While insisting some form of it would be implemented by July, Sarkozy recently gave signs of hesitating on what he had once hailed as a revolutionary step. "We will not impose constraints on our industry if, in the meantime, we allow imports from countries which do not respect environmental norms to flood our markets," he told Le Figaro in a pre-election interview.

With a levy on carbon emissions set lower than in Nordic countries which have already introduced the tax – and with a host of exemptions for big polluters – the reform had been criticised by many ecologists. Cécile Duflot, head of the Green party, said last month she objected to it for two reasons. "It is ecologically ineffective, and socially unjust," she said.

Despite these concerns, however, ecologists today expressed their anger at what they perceived as a symbolic retreat by the man who had vowed to make France a world leader in environmental policy.

A letter addressed to Sarkozy from 10 NGOs, including Greenpeace, WWF and Friends of the Earth, drew a stark comparison between the "pro-environmental frenzy" of the president's first term in office with the "denial" characterising his policy now.

Sandra Mathy, president of the Climate Action Network, told Le Monde.fr: "The idea of a tax which would only be possible at the European level is a fallacious argument: you need unanimity, yet no country is prepared to abandon its fiscal sovereignty. This tax will not see the light of day without a huge amount of work. We can safely say it has been buried for a long time."