Crypto gets a bad rap from an environmental perspective – often deservedly so. But if anyone can get crypto working on the side of the environmental angels, it’s probably a lawyer turned tech founder with degrees from both Harvard and Yale. Enter Dana Gibber.
Flow Carbon, the company that Gibber now helms, came into being because Adam and Rebekah Neumann (yes, that Adam Neumann of WeWork fame) realized that their efforts to try to save forests through philanthropic contributions toward conservation simply couldn’t go far enough, which led them to ask the team at their family office to come up with a solution that could also make money. The result was Flow Carbon, which they co-founded with Gibber and Caroline Klatt.
The concept behind Flow Carbon is relatively simple as DeFi innovations go. The company sells carbon credits to companies seeking to offset their emissions, but Flow Carbon’s carbon credits are tokenized. The tokens can in turn be traded freely on crypto exchanges. By bringing the market onto the blockchain, Flow Carbon asserts that it is making it more transparent and accessible.
Flow Carbon’s goals are lofty, but Gibber is no stranger to ambitious projects. She previously co-founded Headliner Labs, alongside her fellow Flow Carbon co-founder Klatt. The startup, which the pair eventually sold to the digital marketing arm of the Stagwell Group, created an enterprise SaaS platform for brands to make chatbots and other voice-activated e-commerce tools. And even before striking out on her own Gibber kept her focus on cutting edge technology in her lawyer days through her work at the US Foreign Intelligence Surveillance Court of Review, and at the Council on Foreign Relations, where she focused on drones.
We caught up with Gibber recently to discuss Flow Carbon’s plans, how she responds to critics of carbon offsets and what lessons she’s taken from her previous startup experience.
This interview has been condensed and edited for clarity.
Tell us about Flow Carbon. Where did the idea of bringing blockchain technology to the voluntary carbon market come from, and what made you decide to start the company, which is pretty different from your past ventures? What stage is the project at?
[Our] co-founders have a background in philanthropic funding for Nature-Based solutions and quickly realized that reliance on philanthropic gifts to capitalize projects that preserve the earth’s natural carbon sinks was woefully insufficient, which is why global forestland is being destroyed at astronomical rates. The alternative mechanism is one which offers revenue streams to project developers who keep forests standing, and that is carbon offsets. Diving deep into the carbon offset market, [we] recognized that what was holding back tens of billions of dollars in funding from essential projects in nature was a highly inefficient and opaque carbon offset market. We realized that most of the biggest challenges in the market can be solved by leveraging blockchain technology and the crypto markets, and we began building our tokenized carbon credit solution together with some of our corporate partners.
We are currently launching Flow Carbon’s first token – the Goddess Nature Token (GNT). Built using Ethereum smart contracts and due to launch on the polygon layer 2 chain, this token will be backed one-to-one by an unretired nature-based carbon credit.
How did you connect with Adam and Rebekah Neumann and what has it been like working with them so far?
We connected with them through their extensive conservation work, which has been quiet but spans many years and millions of hectares. They have been great partners.
What are the specific benefits of using blockchain technology for the voluntary carbon market? Are there any problems with the current state of the market that you believe using this can fix?
The VCM has a multitude of stakeholders – private project and program developers and non-government organizations – and methodologies and project types. The buying cycle is slow, expensive, and requires subject matter expertise, and therefore is largely inaccessible to many who would want to participate, especially individuals and all but the largest corporations. The vast majority of offset buying is done “over-the-counter” (i.e. bilaterally, not on an exchange), so there is no centralized source of pricing or availability data.
Putative buyers typically receive offerings from numerous brokers or other retailing agents, research what each offering represents at the project and issuance level, and if they decide to buy, there is a lengthy diligence and KYC process followed by negotiating an individual purchase agreement for each buy. The process can often take weeks, and requires carbon expertise, legal resources, and taking counterparty risk – creating massive barriers to entry for those who wish to purchase this asset.
By contrast, a token that is backed by carbon credits can trade on crypto exchanges, which means it can trade with complete price transparency, 24/7/365, and can be purchased in any increment without minimums and without a negotiated purchase agreement. This opens the market to anyone, including individuals, to participate. It also injects much-needed liquidity into the market which otherwise is spread among countless individual sellers.
Flow Carbon’s website notes that its tokens can be traded freely on crypto exchanges. How important is the possibility of a secondary market for tokens to Flow Carbon’s goals?
There already is a robust secondary market for carbon credits, as the brokers and even sophisticated corporations – in particular oil companies – are sellers of credits that they buy directly from projects. Tokenization simply allows everyone to participate in the same way.
Ultimately, the purpose of a carbon credit in the voluntary market is to be retired as an offset, and that is mirrored in the functionality of the token. But having a healthy, liquid, transparent market, including a secondary market, is critical for the growth and maturity of the overall voluntary carbon market. It will also mean more financial innovation will be possible in the market, which will lead to more funding for the projects that generate credits. That is ultimately what this is all in service of: as much funding as possible going to projects on the ground, especially those in nature.
How does Flow Carbon decide which projects to support? What are some of the projects you’re currently backing? How do you measure their impact?
The underlying carbon credits for the GNT must be issued by one of the market-recognized certification bodies, from a project utilized a nature-based methodology, and have been issued in the last five years. We believe those criteria strike the right balance between ensuring that credits are credible and recent, while also allowing for enough volume to actually facilitate liquidity in the token.
We are starting with nature-based credits, for both philosophical and market reasons. From a mission standpoint, we at Flow are particularly passionate about protecting and restoring earth’s natural sinks, like forests, mangroves and grasslands. According to the UN, some 10 million hectares of forest are still being lost each year through conversion to agriculture and other land uses,” a loss amounting to an area the size of Kentucky. Even with growing recognition of the importance of nature-based solutions in tackling climate change, private sector investment is lacking. Flow wants to change that.
From a market standpoint, many of the corporate buyers that Flow works with are interested in nature-based solutions as the source of their offsets, both because they share a similar mission to Flow with regards to protecting our natural environment, and also because nature based solutions often have additional benefits for wildlife, biodiversity, local communities as well as other social justice and community development benefits.
How do you respond to critics who say carbon offsets are not an effective way to fight climate change and that company net zero plans that feature them are mostly just good for PR? (For example: Greenpeace)
The use of carbon credits should not be a substitute for rapid decarbonization.There is no inconsistency between cutting a company’s emissions in line with science-based targets and using high-quality voluntary carbon credits to compensate for residual emissions.
To ensure any such voluntary commitments have integrity, trusted standard setters (e.g., the Integrity Council for the Voluntary Carbon Market, the Science-Based Targets initiative, the Voluntary Carbon Market Integrity initiative and others) have a valuable role to play in advising on appropriate use of credits and appropriate use of terms such as “climate neutral“ or “net-zero.”
What about the environmental concerns regarding blockchain technology itself?
Much has been publicized about the overall energy consumption of the Bitcoin network and its Proof-of-Work (PoW) consensus mechanism. However, unlike PoW, a Proof of Stake (PoS) consensus mechanism does not require huge consumption of energy. In PoS, the integrity of transactions on the network are secured by network participants staking collateral and running more standard servers to do similar calculations that require less energy. Compared to PoW where the network is secured by specially designed hardware competing to solve complex calculations.
The trend in digital assets has largely been a move away from PoW towards a PoS consensus mechanism, which is substantially less energy-intensive. This trend can be seen by looking at some of the most popular blockchains, such as Ethereum (which is undergoing a shift from PoW to PoS) Polygon, and Celo.
Are there any other crypto projects out there aimed at helping the environment that you’re excited about right now?
Flow Carbon has recently joined the Climate Collective, a community of organizations, advocates, and Web3 projects built on the Celo blockchain and dedicated to reversing the harmful effects of climate change. We’re very excited to be part of the Climate Collective, and really believe in Celo as a powerful force at the intersection of Web3 and climate solutions.
You have a very varied background, having worked as a lawyer and having co-founded Headliner Labs, a Saas platform that allows brand marketing teams to build custom AI-powered chatbots. What lessons have you applied from your previous roles in building Flow Carbon?
Answer emails immediately as they come in, or they will inevitably be buried! That’s always my number one learning :).
But on a more serious note, I think leadership experience in tech is quite applicable cross-category, and I draw upon past experience frequently. Some learnings I feel strongly about:
1. I think it’s key for CEOs to have advisors whose advice is trusted and who are readily available when needed. Ideal is if they are subject matter experts offering guidance in their area of expertise.
2. Clarity in communications is essential. Whether it’s internal or external, formal or informal, I try to be super clear in the feedback I offer, requests I make, instructions I give, or thoughts I share. And for the sake of clarity here, I want to note a carve-out for marketing-related communications, which can be as wishy-washy, vague, or indistinct as is deemed strategic.
3. This one is from my co-founder Caroline, a former McKinsey consultant: Always make lists in 3s or 5s! You will never see a deck or email from us with an even-numbered list.
