Flowcarbon - friend or faux?
Our take on WeWork co-founder Adam Neumann’s new crypto project
Adam Neumann, co-founder of WeWork and the crypto company Flowcarbon, speaks at an event in Shanghai in 2018.Jackal Pan/Visual China Group via Getty Images
Adam Neumann, founder of WeWork, just launched Flowcarbon, a company that sells tokenized carbon credits on the blockchain. The idea is quite cleaver - the Flowcarbon protocol makes it possible for projects to offer tokenized carbon credits to businesses aiming to decrease their carbon footprint. After that, the credits can be traded on cryptocurrency platforms.
How does the selling process works? To sell their credits on-chain, carbon credit suppliers pay Flowcarbon a 2% tokenization charge, which is less than the cost of selling them through traditional channels, which can be up to 30% of the project value.
Why put these credits on blockchain, though? Proponents say doing so allows projects that provide these credits to more easily raise capital and boosts transparency for buyers. According to Neumann, putting carbon credits on-chain would solve three key-issues: liquidity, accessibility, and price transparency.
Theoretically, it does seem like an appealing idea. A win-win situation, right? And the market seems to agree - not surprisingly, the start-up was just backed by $70 million from the crypto arm of the venture capital firm a16z.
However there are criticisms. The main criticism is not about the idea of using blockchain for this purpose but about the product behind it - the idea that the credits themselves may not actually be causing any reduction in carbon. For instance, Carbon offsets that don’t provide any additional emissions reductions allow companies that buy them to claim they’ve made a difference to their carbon footprint without having any real impact. According to one professor Robert Mendelsohn of Yale: “They haven’t offset anything. They’ve just got this worthless piece of paper saying they got a credit. You could put that credit onto the blockchain, and it would be just as worthless.” In sum, more easily trading a broken product doesn’t make it any less broken.
What is your take on this matter? Tell in the comments.