CO2 credit derivatives are already trading on exchanges in Europe and in the United States, but the Singapore bourse - to be called ACX-Change - will offer the lure of access to emerging economies eager to finance infrastructure investment.

``Asia has huge potential as a sellers' market to meet increasing demand from [Western] buyers,'' said Kesava Shotam, chief executive of Asia Carbon International BV, Friday.

``Right now there are a lot of buyers and not enough sellers.''

Trading in CO2 credits is one of the mechanisms used to curb greenhouse gas emissions under the Kyoto Protocol on climate change, which came into force in February.

The protocol includes a scheme that allows developed countries to meet CO2 reduction goals by earning credits through investment in emission-reducing projects in developing nations.

The mechanism is designed to help transfer clean but expensive technology to poorer countries.

``With the high growth potential in countries like India and China, there won't be a shortage of projects for the buyers to go into,'' said Shotam.

He said there are at least 200 projects available for investment in India alone and he has four others on hand from Vietnam, Indonesia and Sri Lanka.

``Countries like Spain, Germany, Italy and the Netherlands, among others, are way off their [Kyoto protocol] commitment levels and are desperate to buy the necessary credits,'' said Shotam.

Carbon allowances in Europe traded in Amsterdam surged last week to a record high of 20.30 euros (HK$198) per tonne after Italy agreed to slash the amount of CO2 its industry can emit. Prices have almost trebled since the beginning of the year.

Barclays Capital estimates about 65 million tonnes of CO2 credits have traded so far, worth over US$1 billion (HK$7.7 billion) at current prices. Most of the trades were confined to the West.

Shotam said the exchange in Singapore should trade about 500,000 tonnes in its first year, growing to 1.2 million tonnes in 2007 and 2.4 million tonnes in 2008.