29 May 2022 |

Keep Cool- 05/29/2022

By Nick Van Osdol

DEALS IN FOCUS

Since I started covering climate tech, I haven’t seen as much opposition to any individual companies’ fundraising announcements as I saw this week in response to news of Flowcarbon’s Series A and token sale

Flowcarbon wants to build better rails for the voluntary carbon market (“VCM”). They envision blockchain infrastructure and a crypto token as technologies that can solve various problems from which the VCM suffers. 

They rightly identify the VCM as illiquid and fractured. There are many different standards and methodologies for generating carbon credits, all of which vary across carbon credit registries that act as marketplaces for them, such as Verra. Supply from different carbon offset and credit suppliers fractures across different methodologies, measurement and verification standards, registries, as well as across other variables.

These dynamics reduce liquidity, efficiency, and transparency in the market, affecting all stakeholders. For instance, it’s not easy for projects to get started selling carbon credits. Nor is it easy for buyers to source supply, especially if they’re choosy about what they want and want a lot of it. 

One way to fix liquidity issues and mitigate how fractured the market is would be to create more of a commodity-type asset, i.e., one with standardized, shared characteristics. When you hear the oil price quoted on TV or Bloomberg, it’s in reference to a commodity contract for a specific type of oil, probably Brent Crude. Commodity markets are incredibly ‘deep’; atmospheric CO2 couldn’t trade in those types of markets eventually.  

Flowcarbon presumably wants their token, the Goddess Nature Token, to play this role in the VCM. They plan to back the token with bundles of carbon credits, so traders can redeem their token for the underlying credits if they so desire. 

In their view, the token coupled with more efficient market infrastructure will help carbon offset project developers get funded more quickly, accelerating carbon avoidance and removal. Said differently, they want to get the money flowing!

Scrolling a crypto exchange

Goddess Nature Token, coming to a crypto exchange near you

So. Why are people up in arms over Flowcarbon? 

It doesn’t help that most of the headlines focused on the fact that Adam Neumann, former WeWork CEO, is a prominent investor. His ‘vibe’ could shroud almost any company’s fundraising announcements with significant scrutiny. My sense is he isn’t a day-to-day operator, though, so perhaps that angle is a bit overblown.

The main challenge to the Flowcarbon came from those deeply immersed in carbon offsetting and carbon markets, who argue that its proposed platform tackles challenges in VCMs in reverse. In their eyes, the demand side of the market is a secondary issue; the supply side is more important to get the VCM to ‘work.’

Unfortunately, many carbon offsets sold in the VCM don’t make much of an impact. For instance, many examples of forestry projects aren’t indeed ‘additional’ (i.e., the forests would exist absent additional action). Further, the market is significantly supply-constrained for more impactful carbon products such as carbon removals, which measurably and verifiably remove atmospheric greenhouse gasses. 

One could argue that fixing the demand side of the market will stimulate the supply side of the market, as Flowcarbon does. But will it promote the right type of supply? For instance, the more impactful carbon removals comprise only 5% of all carbon offsets. Is the other 95% worth blitzscaling? If you tokenized all existing VCM supply, there’d be a lot of ‘trash’ on the chain.

Finally, stimulating more trading and liquidity can reduce impact rather than augment it. For carbon credits to drive decarbonization, they have to be ‘retired;’ buyers have to take them out of circulation to avoid the emission of or to remove a ton of CO2e from the atmosphere. When credits aren’t retired, trading carbon credits often results in double-counting. Double counting reduces the impact of carbon markets, satisfying the same demand levels with a smaller supply of offsets.

The net-net

Usually, I’d offer a more specific take here. But I’d prefer to talk to Flowcarbon – which I have plans to do this week – before making that assessment. My primary questions will be:

  1. What’s your process for deciding which credits you want to make a market for? That strikes me as the glue to making the operation credible and impactful. 
  2. What will open-market the roll-out of the GNT token look like? If you had to guess, which type of market participants do you think will find this most useful at first? On which demand signals do you base those hypotheses?
  3. In your eyes, lest it gets left up to interpretation, what’s the through line from Flowcarbon’s platform to climate impact?
  4. Tell us about the team, their expertise, and their experience. What were the ‘aha moments’ that inspired you to tackle voluntary carbon markets with blockchain and crypto infrastructure?

Let me know what else to add. I’m all ears, as I’m sure the Flowcarbon team will be. 

DEAL HEAT 🔥

Here are financing rounds, deals, and new funds that caught our eyes this week. 

⚡ Mainspring Energy raised $150M in Series E funding to accelerate the deployment of linear generators that deliver low-emissions, fuel-flexible power and can be modularly deployed across a variety of site types. Lightrock led the round. Read more here(U.S., Hardware)

🚗 Booster raised $125M in Series D funding to expand its fuel delivery business. The company delivers conventional, renewable, and alternative fuels directly to vehicles, focusing on servicing fleet operators. Rose Park Advisors led the round. Read more here(U.S., Software & Hardware)

💱 Flow Carbon raised $70M across a Series A and a crypto token sale for its blockchain-based carbon credit trading platform. Andreessen Horowitz led the round. Read more here and in our ‘Deals in Focus’ section above. (U.S., Software)

🚲 Budbee raised $40.94M in equity funding to expand its sustainability-focused last-mile delivery business. Read more here(Sweden, Hardware)

🧑‍🌾 Regrow raised $38M in Series B funding for its SaaS offering that helps farmers forecast and calculate the environmental impact of their farming practices, with important implications for measurement and verification of things like carbon credits. Galvanize Climate Solutions led the round. Read more here(U.S., Software)

🔌 SparkCharge raised $23M in Series A funding to scale its mobile E.V. charging network. Tale Venture Partners and Pendulum co-led the round. Read more here(U.S., Hardware)

🏗️ Converge raised $18.95M in Series A funding to use A.I. and sensor data to make construction with concrete more efficient, reducing emissions in the process. OGCI Climate Investments led. Read more here(U.K., Software)

📊 Greyparrot raised $11M for its A.I. waste analytics platform that monitors and analyzes waste composition. Una Terra led the round. Read more here(U.K., Software)

📊 Planet FWD raised $10M in Series A funding for its carbon assessment platform that helps CPG companies reduce or offset their carbon footprint. Acre Venture Partners and Congruent Ventures co-led the round. Read more here(U.S., Software)

♻️ Shellworks raised $6.2M in seed funding to scale its plastic-free and compostable packaging technology. The company’s packaging material, Vivomer, is made using bacterially-derived components grown via a fermentation process, which they claim decompose within a year. LocalGlobe led the round. Read more here(U.K., Consumer Goods)

📈 Allinfra raised $6M in Series A funding to expand its asset tokenization platform, allowing organizations to trade in renewable infrastructure assets. Nomura led the round. Read more here(Hong Kong, Software)

📊 Singularity Energy raised $4.5M in seed funding for its carbon intelligence platform that provides time and location-based grid emissions data to grid operators, utilities, and businesses. Spero Ventures and Energy Impact Partners co-led the round. Read more here(U.S., Software)

🍌 Foodsteps raised $4.1M in seed funding to help companies in the food industry assess the environmental impact of their operations. Octopus Ventures led the round. Read more here(U.K., Software)

♻️ Tvarit raised $3M in seed funding for its industrial A.I. software used in quality prediction for the aluminum casting process. The company has ambitions to expand its focus and drive more sustainable, zero-waste manufacturing. Matterwave VenturesFutury Capital, and BMH led the funding. Read more here(Germany, Software)

🔋 Natrion raised $2M in seed funding for its polymer-ceramic hybrid solid electrolyte (LISIC), used to replace liquids in existing lithium-ion battery manufacturing lines. LISIC, the company claims, helps improve the charging speeds, range, and safety of E.V.s’ batteries. TechNexus Venture Collaborative led the round. Read more here(U.S., Hardware)

🍄 Hyfé Foods raised $2M in pre-seed funding to make sustainable foods with mycelium flour. The Engine led. Read more here(U.S., Consumer Goods)

ELSEWHERE IN CLIMATE

📚 Good reads: The proof is in the pudding – do oil majors take climate change seriously yet?

📜 Legislation: Heat pumps may soon benefit from legislative tailwinds in the U.S., another boon in what’s already a big year for this decarbonization technology.  

🧪 Innovation: Rolls Royce keeps beating the drum on their SMRs. Another potential benefit of SMRs? Reducing land use for energy generation. 

⬇️ Innovation: Learning more about Charm Industrial’s unique, leading carbon sequestration approach

🔁 Turning the tide: More signs of life in support for nuclear power globally. 

📉 Going under: Electric Last Mile Solutions, an E.V. startup for fleet operators that went public via SPAC last year, may go out of business this year.

🔮 A glimpse of the future: Oil companies aren’t producing as much oil as they could, even with oil at $119 per barrel. People have been asking this question for decades… but are we officially past peak oil

🚫 so good news: Weaning off Russian gas? Predictably, coal is a short-term ‘solution’ for some.  

👍 Good news: E.V. sales are skyrocketing. No, E.V.s aren’t the most sustainable things to build. But the gas miles they displace help mitigate climate change. 

💡 ICYMI: Our Keep Cool highlight for the week was the deep dive on Ample, a U.S.-based battery swapping company. The folks on the bird app enjoyed this thread on swapping, too.