A Dutch-Belgian bank paid €13 million (US$18.5 million) for carbon credits yesterday in what the Brazilian bourse called the first such auction on a regulated exchange.

Fortis Bank bought all 808,450 metric tonnes (891,163 imperial tons) sold on the Sao Paulo-based Brazilian Mercantile & Futures Exchange with an offer of €16.20 (US$22.90) per tonne.

Fourteen companies bid in the auction that started at €12.70 (US$17.59), the exchange reported.

The Sao Paulo city government sold the credits under the Kyoto Protocol, a treaty that allows companies that exceed limits on carbon dioxide and methane pollution to buy carbon credits, which are created by sponsoring projects that remove carbon dioxide from the air or avoid emissions into the atmosphere.

The credits sold yestersday originated from the Bandeirantes Landfill, which is operated by a private company under concession from the Sao Paulo city government.

The landfill receives seven million tonnes of solid residues per day. Methane gas emanating from the residue is burned and used to produce energy.

Run by Biogas Energia

The project is run by privately held Biogas Energia Ambiental SA.

The Kyoto Protocol caps the amount of greenhouse gases like carbon dioxide and methane produced by power plants and fuel-intensive manufacturers in more than two dozen countries.

Such gases are believed to contribute to the warming of the Earth's atmosphere.

The United States has not signed the treaty.

- AP