  Carbon credits purchased in the voluntary carbon market allow unavoidable
emissions, such as from international flights for essential travel, to be
offset by an equivalent climate benefit, such as avoiding emissions from
tropical deforestation. However, many concerns regarding the credibility of
these offsetting claims have been raised. Moreover, the credit market is
manual, therefore inefficient and unscalable, and non-fungible, therefore
illiquid. To address these issues, we propose an efficient digital methodology
that combines remote sensing data, modern econometric techniques, and on-chain
certification and trading to create a new digital carbon asset (the PACT
stablecoin) against which carbon offsetting claims can be transparently
verified. PACT stablecoins are produced as outputs from a reproducible
computational pipeline for estimating the climate benefits of carbon offset
projects that not only quantifies the CO2 emissions involved, but also allows
for similar credits to be pooled based on their co-benefits such as
biodiversity and jurisdictional attributes, increasing liquidity through
fungibility within pools. We implement and evaluate the PACT carbon stablecoin
on the Tezos blockchain, which is designed to facilitate low-cost transactions
while minimizing environmental impact. Our implementation includes a contract
for a registry for tracking issuance, ownership, and retirement of credits, and
a custodian contract to bridge on-chain and off-chain transactions. Our work
brings scale and trust to the voluntary carbon market by providing a
transparent, scalable, and efficient framework for high integrity carbon credit
transactions.
