"We are now the first country to use state money to buy C02 (credits)," Environment Ministry spokeswoman Babette Graber told Reuters.

"The IFC will identify and select the projects in developing countries," she added.

Under the Kyoto treaty, industrialised nations must cut emissions of carbon dioxide, the main greenhouse gas, by an average of five percent from 1990 levels by 2012.

Scientists have blamed carbon dioxide from smokestacks and tailpipes for contributing to global warming, which many researchers say will boost the Earth's average temperature in the coming decades, raising sea levels and sharply altering weather patterns.

The treaty will not become legally binding until 55 nations representing 55 percent of the industrialised states' CO2 output ratify it.

So far none of the major industrial powers has done so, and the United States, the world's biggest polluter, said last year it would not take part.

Under the terms of the new contract, the Netherlands will receive credits for 10 megatonnes of CO2 toward its total reduction target of 250 megatonnes, the Dutch Environment Ministry said.

The new projects would fall under the Kyoto treaty's Clean Development Mechanism (CDM), which allows states to earn credits toward their own pollution targets by helping fund clean energy projects in developing countries.