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Home»Uncategorized»WeWork co-founder Adam Neumann’s carbon credit crypto project sounds like a scam within a scam
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WeWork co-founder Adam Neumann’s carbon credit crypto project sounds like a scam within a scam

By adminMay 26, 2022No Comments6 Mins Read
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Adam Neumann is back. The co-founder and former CEO of WeWork and later subject of the podcast TV series We crashed now he says he wants to fix climate change, with crypto.

Specifically, Neumann wants to put carbon credits in the blockchain. But making carbon credits easier to buy and sell does not solve the real problem of carbon credits and offsets, which is that they are broken. The easier trade of a broken product does not make it less broken.

Neumann’s new company is called Flowcarbon and has big ambitions, which will have the support of $ 70 million from the cryptocurrency arm of venture capital firm a16z. On its website, Flowcarbon says the current system of buying and selling carbon credits is based on an “opaque and fractured market infrastructure” and that the carbon credits themselves have “low liquidity, affordability and price transparency”. In other words, the problem is the carbon credit market, and the way to solve it is to facilitate the trade in carbon credits.

This is a classic argument for a crypto company, by the way. The answer for the whole cryptographic world seems to be greater commodification. But when it comes to saving the planet (as with most things in life), this is not necessarily true.

Carbon credits and offsets are two sides of the same coin, and the terms are often used interchangeably. Carbon offsetting refers to a project that reduces carbon dioxide emissions (forest preservation is popular) and carbon offsets generate carbon credits. And they both sell units that represent one metric ton of carbon dioxide. Flowcarbon is supposed to work by creating a new cryptographic token, called Goddess Nature Token or GNT. These tokens would represent carbon credits, and Flowcarbon users who want to market carbon credits would do so by buying and selling these tokens.

This second part has the potential to be problematic: unlike stocks or cryptocurrencies, carbon offsets should ultimately be taken off the market in order to have a lasting and traceable impact on a carbon footprint. company or individual. Google, for example, “withdraws” any carbon offsets it buys, ending the trade so that no one else can claim its climate benefits. (The effectiveness of these offsets is debatable.) Flowcarbon users have the option of withdrawing their tokens, exchanging them for classic carbon credits outside the blockchain, or continuing to market them. If a Flowcarbon user kept carbon, well, flowing by trading their carbon credits, they cannot claim to have offset any of their own emissions.

“I think they’re trying to solve something that’s not a problem,” Robert Mendelsohn, a professor of forestry and economics at Yale, told Recode. “The kind of thing that keeps blockchains good, which is to make sure you don’t lose anything, is not really a problem with today’s market. It’s not where they’re broken. Where they break is that they themselves credits may not be causing any carbon reduction. ”

As my colleague Umair Irfan wrote in 2020, one of the key principles for getting a good carbon credit is “additionality”, or making sure that a carbon offsetting project will really lead to a reduction. of emissions that would not otherwise have happened. This is more complicated than it sounds: a 2020 Bloomberg survey found that carbon offsets sold by Nature Conservancy, one of the world’s largest non-profit environmental organizations, were based on forest properties that would probably have been retained even without additional funding. In other words, emissions reductions from these trees would have occurred anyway, making them invalid as carbon offsets.

This is just one example. Carbon credits and offsets are often wrong, and in some cases can even cause additional damage to forests. Carbon offsets that do not provide any additional emission reductions allow companies that buy them to claim that they have made a difference in their carbon footprint without any real impact. “They didn’t make up for it,” Mendelsohn said. “They just got this worthless piece of paper that says they have a credit. You could put that credit in the blockchain, and it wouldn’t be the same.”

It is unclear how Flowcarbon would make carbon offsets more useful or reliable. Nicole Shore, a spokeswoman for Flowcarbon, said in an email that the GNT-backed credits “follow the criteria of the global carbon market” and come from one of the four major carbon credit registries. The company also says that the carbon credits behind its testimony have been “certified”, but does not detail how this certification process takes place, or whether it has a different verification system from the current carbon credit market.

The difficulty of verifying carbon credits means that it can take a while to hit the market. As more companies are interested in buying credit to offset their emissions, this can create a bottleneck.

“The problem with today’s markets has nothing to do with how we can market them more effectively,” said Anil Madhavapeddy, who is an associate professor of computer science and technology at Cambridge University and director of the Credit Center. Cambridge carbon. “We just don’t have enough supply.”

Madhavapeddy, like Flowcarbon, is working on building a blockchain-based solution for carbon credits. But unlike Flowcarbon, he is not interested in building a market for these loans. Instead, it has focused on verifying that they are real by using satellite imagery and remote sensing technology to monitor carbon offset projects around the world and record results on the blockchain. . Madhavapeddy hopes the technology will make it easier to get more carbon credits on the market faster.

Instead of building a whole new market for carbon credits, for now, Madhavapeddy just wants to help ensure that these credits are based on something that has a real impact. “Because supply is so limited, you don’t need to tokenize all of these things,” Madhavapeddy told Recode. “It takes years for the new [carbon offset] projects to begin with, so every market built right now is shuffling the same old pieces. ”

Crypto’s climate credit gold rush doesn’t go unnoticed by traditional market players either. Verra, the world’s largest carbon offsetting registry, announced this week that it will no longer allow its credits to be used as a basis for cryptocurrencies. Active crypto markets for carbon credits, Verra said, create too much confusion about who should get the final credit for carbon reductions.

Once carbon credits are more readily available, and in a verifiable way, companies like Flowcarbon may be key to making carbon credits and offsets more easily accessible to ordinary people who are interested in offsetting them. its carbon emissions. But let’s not forget what happened the last time Adam Neumann promised great things in founding a company with a questionable business model. WeWork speculated about how flexible our relationship with our built environment might be, and while it remains to be seen whether Flowcarbon is different, we can’t afford to leave our relationship with the natural world open to similar speculation.

The commodification of nature is part of what brought us to our climate mess in the first place. Maybe it’s time to learn from our mistakes.



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