Carbon markets in global transition

Since 2009, Advantag has been active in the trading of CO2 emission allowances and other climate protection instruments. With a highly digital structure and a team of seven employees, the company generated around 34 million EUR in revenue last year, with approximately 40 million EUR expected this year. Advantag works with businesses across many industries that must participate in the European or national emissions trading systems and supports customers across Europe while cooperating with international partners in the voluntary carbon market. Emissions trading has become a key element of European climate policy: companies must purchase allowances for their emissions while the total number of certificates is gradually reduced to support the long-term goal of climate neutrality.

Carbon markets between climate policy and finance

In many ways, the trading of emission allowances functions similarly to financial markets. Certificates are traded on exchanges such as the European Energy Exchange in Leipzig or on international platforms, where companies acquire the allowances required to cover their emissions. “The emission of greenhouse gases currently costs around EUR 70 per t of CO2, creating an economic incentive for companies to reduce their emissions,” explains Raik Oliver Heinzelmann. Emissions trading is therefore not only a regulatory obligation but also a financial factor: companies that emit less need fewer certificates and can reduce their costs. At the same time, allowances can function as financial assets that can be resold if companies require liquidity or have purchased more certificates than needed. Advantag acts as a specialized trading partner, offering exchange-based and over-the-counter transactions through its memberships at several exchanges and an international partner network. Speed plays a decisive role in this market. “Our clients place an order, transfer the funds, and we execute the transaction at the desired price – often within the same day,” says Raik Oliver Heinzelmann. The company also publishes a weekly CO2 market report that provides guidance on market developments and potential purchasing opportunities.

A growing market driven by regulation

The importance of emissions trading is expected to increase significantly in the coming years. Thousands of industrial installations and aviation operators already participate in the European Emissions Trading System, while additional national systems have been introduced for sectors such as transport and buildings. Market behavior has also changed. While companies previously purchased emission allowances throughout the year when prices were favorable, many now wait until shortly before the compliance deadline in order to preserve liquidity. “With the introduction of EU-ETS 2, many additional companies across Europe will become obligated to purchase emission allowances – in Germany alone, several thousand new participants could enter the system,” says Raik Oliver Heinzelmann. At the same time, the voluntary carbon market is expected to expand significantly as companies increasingly offset unavoidable emissions through climate protection projects. “Revenues from emissions trading should be used more visibly to support citizens, for example through a climate dividend,” says Raik Oliver Heinzelmann.