Ireland has launched Europe's first emissions trading scheme. The auction, which opened yesterday, is being organised by the Environmental Protection Agency (EPA) and will run until February 17th.

Credits worth €6.3 million will be available and the proceeds of the sale will be used to run the programme.

However, the credits are available to any of the 11,000 registered institutions in the European Union, which means that Irish companies may have to pay more to secure the additional rights.

Under the terms of the offset system, which has been developed as a precursor to the Kyoto agreement - an international accord designed to reduce greenhouse emissions - each fossil fuel-emitting institution in Europe has had a cap set on the amount of emissions it is allowed to release.

Up until now, institutions that have failed to meet their targets have had to find another company with surplus emission credits from which to purchase additional credits.

The EPA hopes that as competition for these credits hots up and the prices increase, adapting businesses to reduce emissions will become a more favourable option rather than buying additional credits.

The emissions trading scheme will run until the end of 2007 when the terms of the Kyoto Protocol will take effect.