The project, which will see islanders invest in energy saving for an entire year, is part of a national initiative tackling climate change.

The Isle of Eigg Heritage Trust has secured a £20,000 grant to pilot the project, after reaching the final of the Big Green Challenge, a UK-wide competition set up by the National Endowment for Science, Technology and the Arts (Nesta).

Their pilot is the only Scottish finalist, competing alongside nine other groups, and the winner will receive £1 million.

In an attempt to reduce the amount of carbon dioxide produced by 250 tonnes, Eigg's 68 residents plan to install solar panels in their homes and harvest wood for fuel through a woodland management scheme.

Lucy Conway from the Isle of the Eigg Heritage Trust, one of the volunteers taking part, said: "It is about finding alternatives. Instead of burning coal, burn wood instead. We are going to be very busy for the next 12 months on Eigg and I'm looking forward to getting started. We will be installing insulation and solar water panels in houses.

"Then we plan on recording and publishing how much we save so that people throughout Scotland and all over the world can do the same.

"Climate change is such a huge subject, but we, as an island, are taking steps to reduce it."

Patrick Harvie MSP, co-convener of the Scottish Green Party, who officially launched the programme yesterday,

said: "The Isle of Eigg wants to lead the way towards becoming a zero-carbon-energy community.

"Their 'Build your own Green Island' project is a very welcome part of this project, and should be a great way to share ideas with other communities who are looking for ways to reduce their own carbon footprint."

Mr Harvie has today tabled a motion in the Scottish Parliament congratulating Eigg on reaching the final.

John Hutchison, chair of the Isle of Eigg Heritage Trust, said: "We're very proud to be the only Scottish finalist in the Big Green Challenge. Reducing Eigg's emissions is vital to our sustainability, but we're very much looking forward to monitoring and sharing what we've achieved with the rest of the country.

"The interest in the Big Green Challenge has been building since Eigg Electric brought 24-hour renewable power to our community.

"We expect it to increase further as our Big Green Challenge Year unfolds."

Should the Isle of Eigg Heritage Trust win the £1 million prize, it plans to spend the money on a developing green facilities and equipment on the island for the future.

A website with the trust's results and findings will be launched in February 2009.