Flowcarbon (a blockchain-based platform for carbon credits co-founded with former WeWork CEO Adam Neumann) has started refunding investors after the "Goddess Nature Token", which was expected to be launched, failed to do so. After more than a full year of delays, the decision was made after market conditions were difficult and carbon registries refused to cooperate.

Tokenization Challenges

Flowcarbon aimed at revolutionizing the carbon credit market through tokenizing credits and making them more available to a wider variety of investors. Each GNT is backed by a carbon credit, which represents a metric tonne of carbon dioxide that has been removed or prevented from entering our atmosphere. The project was not without its challenges.

Verra, the leading carbon registry in November 2021, warned against tokenizing retired credits because of concerns over double-counting. Verra then banned the tokenization in May 2022 to prevent fraud and ensure environmental integrity. These regulatory challenges had a chilling impact on Flowcarbon’s plans and contributed to the delays in the launch of GNT.

Investor Sentiment and Market Conditions

The voluntary carbon market has come under scrutiny. It is estimated that the market will grow to $2 billion by 2021. Investigating the quality of the carbon credits, it was found that some projects exaggerated the environmental benefits of their projects. This led to a decrease in the value for carbon credits. Investor frustration grew as launch dates for GNT tokens were continually postponed through 2022.

Flowcarbon raised an initial $70 million, including $38 millions through the sale its planned token. This funding was provided by high-profile investors, such as Andreessen, Horowitz and Samsung NEXT. Investor confidence declined despite the initial excitement as market volatility continued.

Details of the refund process

Flowcarbon quietly began the refund process in recent weeks for GNT buyers. A spokesperson confirmed that the refunds are being made under standard terms because of industry delays. Investors had to sign confidentiality agreements and waivers of any claims against Flowcarbon or its affiliates. Some investors have expressed concern about this approach, especially given the high-profile nature of the project.

Dana Gibber stated that Flowcarbon remains committed to its mission, which is to integrate blockchain technology and environmental sustainability, despite GNT's setback. The company is still exploring opportunities in the carbon finance industry, but the details of its current project are not yet known.

Future Outlook for Flowcarbon

Despite the challenges that Flowcarbon faces, it is expected that the carbon credit market will grow significantly. McKinsey analysts predict that the demand for carbon credit could grow by 15 times or more by 2030. This would result in a potential market value of $50 billion. The difficulties faced by Flowcarbon, however, highlight the complexities of tokenizing carbon credit, with concerns over regulatory uncertainty and market volatility still being significant barriers.

By September 2024 the combined market capitalization of tokens related to energy and the environment will be approximately $186,000,000. The majority of the market is dominated by Powerledger’s POWR tokens and Energy Web’s EWT.

Flowcarbon’s experience is a cautionary story for other companies attempting the intersection of Blockchain technology and environmental financing. It highlights the importance of careful consideration of regulatory structures and market dynamics.

Image source: Shutterstock