Flowcarbon is an innovative participant in the voluntary carbon market, utilizing new technologies to address climate change. The company aims to enhance the efficiency and accessibility of carbon markets, providing a novel approach to environmental action and contributing to broader climate solutions.
What is Flowcarbon
Flowcarbon is a climate technology company, founded in 2021, that builds infrastructure for the voluntary carbon market. Headquartered in New York City with additional offices in London, its mission involves increasing access and liquidity within carbon markets by integrating financial services, decarbonization projects, environmental commodity markets, and technology.
The company’s platform helps organizations and individuals calculate and offset their carbon footprint by converting carbon credits into digital tokens. Flowcarbon secured significant funding, including a $70 million investment round led by Andreessen Horowitz, to build this market infrastructure and accelerate climate solutions through innovation.
Understanding Carbon Credits
Carbon credits, also known as carbon offsets, represent a measurable reduction or removal of one metric tonne of carbon dioxide equivalent (CO2e) from the atmosphere. They allow individuals or entities to compensate for their greenhouse gas emissions, providing a financial incentive for projects that actively reduce or remove carbon.
These credits are generated through various activities, such as reforestation, renewable energy initiatives, or projects that capture methane gas. Before issuance, projects undergo a rigorous validation and verification process. This ensures emission reductions are real, measurable, and would not have occurred otherwise, a concept known as “additionality.” Independent third-party organizations, like Verra, Gold Standard, and Climate Action Reserve, verify these reductions, confirming adherence to established standards.
How Flowcarbon Operates
Flowcarbon leverages blockchain technology to transform traditional carbon credits into digital tokens. This process begins with verified carbon credits, initially registered with established registries such as Verra or Gold Standard. Each token minted by Flowcarbon represents a single, verified carbon offset, corresponding to one tonne of carbon dioxide equivalent.
Once verified off-chain, Flowcarbon facilitates their transfer into a special purpose vehicle, where the credits are locked for tokenization. This creates a “two-way bridge,” allowing carbon offset credits to be represented as tokens on the blockchain and, conversely, to be taken off-chain through redemption. Flowcarbon’s token architecture also allows for the bundling of similar credits, such as its Goddess Nature Token (GNT), which pools nature-based carbon credits to facilitate greater liquidity. These tokenized assets can then be traded on digital platforms, streamlining transactions and reducing intermediaries.
Significance of Flowcarbon’s Approach
Flowcarbon’s approach addresses long-standing challenges within the traditional voluntary carbon market, including fragmentation, lack of transparency, and limited accessibility. By tokenizing carbon credits on a blockchain, the company creates an immutable and transparent record of ownership and transactions. This helps mitigate risks like fraud and double-counting, fostering greater trust as participants can track each credit’s lifecycle from issuance to retirement.
The tokenization process also significantly improves market liquidity and accessibility. Digital tokens allow for easier trading on various platforms, enabling a wider range of participants, including individuals and smaller organizations, to engage. This enhanced accessibility and efficiency can lower transaction costs and speed up settlement processes, driving more investment into carbon reduction and removal projects. By streamlining capital flow to project developers, Flowcarbon aims to incentivize and scale climate change initiatives, accelerating global efforts towards carbon neutrality.