Investing in Flowcarbon

When I was 22, I spent several months working in the field in South Africa. I was there as a part of a research project funded by the National Science Foundation, whose aim was to better understand the role of that region in the global carbon cycle. The data we collected would be used by organizations like the United Nations’ Intergovernmental Panel on Climate Change to model potential climate change scenarios and provide recommendations for how to tackle a response.

We slept outside (I was awoken most mornings by a monkey landing on the roof of my tent) and I was dirty and exhausted for weeks on end. While the mud and bug bites eventually faded, I was left with the sense that a challenge of this magnitude could only be tackled through technology. 

In the years since, awareness of the climate crisis has grown, and the need to address it has only become more pressing. As the world begins a generational shift to cleaner sources of energy, there’s a major opportunity to create accessible, transparent carbon credit markets that put a public price on carbon. For this to work, it also happens to require one of the areas in which web3 shines: an open, trustless marketplace.

The carbon credit market could potentially grow to $50B by 2030*, and on-chain carbon credits can help facilitate this reality. Bringing carbon credits on-chain adds major efficiencies to the market, enabling individuals and corporations to internalize the cost of emissions, reducing negative externalities that are currently socialized, and ultimately incentivizing more sustainable practices. Unlike current voluntary carbon credit marketplaces, which are fractured, opaque, and gated, tokenized carbon credits allow anyone the ability to purchase credits and control when they are retired as offsets, with built in liquidity and price discovery.

This is why we’re excited to announce that we’re investing in Flowcarbon. 

Co-Founded by Dana Gibber, Caroline Klatt, Rebekah Neumann, Adam Neumann and Ilan Stern, and led by the powerhouse trio, Dana, Caroline, and Phil Fogel, Flowcarbon is building an on-chain carbon credit tokenization platform through an open protocol that allows all market participants equal access. Anyone can come to the platform and tokenize their certified off-chain carbon credits, unlocking a new economic flywheel for sustainability. Buyers can purchase ERC-20 tokens backed by a bundle of certified carbon credits issued in the last five years from projects that protect and restore nature.  

On-chain carbon credits represent an innovative primitive that can be integrated into the existing DeFi ecosystem as a composable financial instrument and used creatively by web3 builders to come up with new ways to incentivize climate-positive behaviors. Flowcarbon tokens, including its first token, Goddess Nature Token (GNT), are fully backed by the live value of off-chain credits. GNT can be used as collateral for lending, as an asset for protocol treasuries, as a portion of stablecoin reserves, or as an on-chain offset. 

These use cases can drive dormant sources of demand that further incentivize new pipelines for supply, primarily in the form of nature-based solutions and clean energy projects. We believe on-chain carbon credits will be a critical piece of the financial architecture needed to quickly facilitate a net-zero future.

Web3 continues to unlock new possibilities that could fundamentally change how markets operate. We’re beyond thrilled to back Flowcarbon in their efforts to build a new standard for carbon credits, accelerating our transition to a net-zero economy.

Thanks to Porter Smith for his contributions to this post and support on the investment. 

* According to McKinsey, “A Blueprint for Scaling Voluntary Carbon Markets to Meet the Climate Challenge,” https://www.mckinsey.com/business-functions/sustainability/our-insights/a-blueprint-for-scaling-voluntary-carbon-markets-to-meet-the-climate-challenge, January 21, 2021.

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