Adam Neumann’s new Carbon Credit-Crypto startup has been suspended

by Arthur · July 17, 2022

Former WeWork CEO Adam Neumann is currently the subject of an Apple TV + drama about how he led the company into “an implosion unlike any other in the history of start-ups” (as New York Times described it).

So how’s it going with his new venture, Flowcarbon? Well, the climate change-focused crypto startup has put the pin product indefinitely, but for macro reasons beyond his control. Call it an escalation?

Not a money machine

Flowcarbon, which was co-founded by Neumann but emphasizes that he is not involved in day-to-day operations, is part of a small group of companies that issue cryptocurrencies backed by carbon credits. Yep, it’s one loosely regulated and controversial financial instrument backed by another.

Carbon credits represent a metric tonne of carbon dioxide removed or prevented from entering the atmosphere, and are normally purchased through brokers or directly from the developers of carbon projects. Flowcarbon and rivals Toucan Protocol and KlimaDAO have proposed converting these credits into cryptocurrencies so that they can be traded on the blockchain and then “burned” – or permanently removed from circulation – when the owner wants to compensate for their emissions. A first wave of interest has given way to uncertainty:

Toucan and KlimaDAO began selling tokens in October 2021, and during the last three months of the year, hundreds of millions of metric tons of carbon worth over $ 3 billion were traded using crypto tokens, according to KlimaDAO data. But there are concerns that this obscures the true purpose of carbon credits, which is ultimately to reduce carbon and not be a trendy crypto asset.
“If people now buy these tokens because they see that it’s a money machine … I think it’s potentially unhealthy,” Guy Turner, CEO of Trove Research, told Wall Street Journal. Of the 23 million carbon credits that were transferred to krypton networks in the six months to March, less than 2% have been used to compensate for emissions, says KlimaDAO-data.

Unverified: In May, Verra, the world’s largest carbon offset register, banned the use of its credits to support new digital tokens, saying the practice caused confusion about the climate benefits of offsets. Flowcarbon announced the same month that it had raised $ 70 million from pre-sales of the token and investors, but then set plans to launch the token indefinitely. Toucan and Klima have also slowed down operations, and all three are waiting for Verra to propose new ways to convert credits into crypto. Given cryptocurrencies are down $ 1 trillion since November, perhaps they chose the right time to lie low.