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, 4C has been designing an efficient digital methodology that combines remote sensing data, modern econometric techniques, and on-chain certification and trading to construct a new digital carbon asset (a "PACT", or Permanent Additional Carbon Tonne) against which carbon offsetting claims can be transparently verified. PACTs not only quantify 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 have implemented a prototype of the PACT smart contracts on the Tezos blockchain, which is designed to facilitate low-cost transactions while minimising 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. Sadiq Jaffer has lead the publication of a paper with the details of our implementation in ICBC 2024, and will be presenting it during the poster sessions on May 27th-30th 2024. If you are attending the conference, please do drop by and say hi, or otherwise get in touch with any feedback on our paper or a pointer to any deployments.