Flowcarbon, a climate tech company co-founded by Adam Neumann, set out with the goal of combining carbon credits with blockchain technology, hoping to disrupt the carbon credit market.
The company managed to raise $70 million from big investors like Andreessen Horowitz, General Catalyst, and Samsung NEXT.
Despite this significant backing, Flowcarbon’s highly anticipated “Goddess Nature Token” (GNT) has yet to see the light of day.
In recent months, Flowcarbon has begun refunding investors, citing challenges in the market and regulatory resistance as the reasons for the delay.
Tokenising carbon credits
Flowcarbon set out with the goal of making carbon credits more accessible to a broader audience using blockchain technology.
Carbon credits are certificates representing the removal of one metric ton of carbon dioxide from the atmosphere. These credits are typically purchased by large corporations to offset their carbon emissions.
Flowcarbon’s plan was to create blockchain-based tokens that would represent these carbon credits, making it easier for investors to participate in the carbon credit market.
Market analysts, such as those from McKinsey, had forecasted that the demand for carbon credits would rise significantly over the next few decades.
By 2030, they predicted that demand could be 15 times higher than today, and potentially 100 times higher by 2050. In addition, the carbon credit market was expected to reach a value of over $50 billion by 2030.
Flowcarbon sought to take advantage of this projected growth by introducing its tokenised carbon credits to investors.
The GNT token was designed to be tied 1:1 with carbon credits. In theory, each token would represent one carbon credit, providing it with real-world value. This would allow investors to easily access and trade these credits through blockchain.
Despite initial excitement around the project, Flowcarbon has been unable to launch the GNT token, leading to growing frustration among its investors.
Refunds and regulatory setbacks
Flowcarbon’s plan to launch the GNT token hit a series of regulatory roadblocks, which led to delays in the project. Over a year after investors had initially anticipated the launch, Flowcarbon has begun issuing refunds.
According to a Forbes report on 11 September, refunds have been issued “in recent weeks” to some of the investors who had been waiting for the token to become available.
The company has attributed these delays to both regulatory challenges and difficult market conditions. In Zoom calls with investors, Flowcarbon explained that the market environment had been unfavourable, and significant resistance from major carbon credit registries added to the difficulty.
These registries, which verify and track carbon credits, have raised concerns about how tokenising credits could result in double-counting emissions reductions.
Flowcarbon has not publicly announced its refund efforts. However, a company spokesperson told Forbes,
“It has been well known that since last year we have been offering refunds to retail GNT buyers due to the industry delays, with standard and customary terms, as we continue to grow Flowcarbon as a leader in carbon finance”.
Reports indicate that Flowcarbon required investors receiving refunds to sign waivers that protect the company and its affiliates from legal claims, while also including confidentiality agreements. This has made it difficult to determine how widespread the refund process has been.
Flowcarbon’s struggles also reflect broader challenges in the carbon credit market, particularly when it comes to tokenisation. The concept of turning carbon credits into blockchain-based tokens has faced scepticism from some quarters.
Major carbon registries have expressed concerns that tokenised credits could make it more difficult to accurately track the reduction of carbon emissions, potentially leading to double-counting. These issues have slowed the progress of many companies in the space, including Flowcarbon.
Despite these setbacks, Flowcarbon’s leadership remains committed to the company’s original vision. Under the direction of CEO Dana Gibber, the company continues to push forward with its plans to bring carbon credits to the blockchain.
Although the GNT token has been delayed, Flowcarbon aims to position itself as a key player in carbon finance once these challenges are resolved.
In May 2022, Flowcarbon raised $70 million in Series A funding, with $38 million of that reportedly coming from the sale of Flowcarbon’s tokens. However, it remains unclear whether retail investors were included in that total.
According to CoinGecko, the current combined market capitalisation of energy and environment-related tokens is $186 million. Of this, $176 million comes from just two tokens – Powerledger’s POWR and Energy Web’s EWT – showing the challenges new entrants like Flowcarbon face in the industry.
