I started paying close attention to carbon removal credits after watching promising startups tout sky-high potential while their customers — and sometimes investors — struggled to verify whether the climate benefits were real. I’ve seen well-intentioned funds and retail investors rush into deals because the headlines promised “removals,” only to discover later that the credits were temporary, double-counted, or based on shaky science. If you’re evaluating a startup that claims to sell or retire carbon removal credits, here’s a pragmatic checklist I use to separate meaningful climate action from greenwashing risk.
Understand the difference: avoidance vs. removal
One of the first traps is terminology. Companies often blur the line between emissions avoidance (reducing future emissions) and carbon removal (taking CO2 out of the atmosphere). Avoidance credits — like many renewable energy certificates or cookstove projects — prevent emissions but don’t remove historical CO2. Removal credits, on the other hand, should represent CO2 stored long-term, for example via direct air capture with geological storage, enhanced mineralization, or durable biochar.
Ask the startup directly: Are the credits you sell explicitly characterized as permanent carbon removal? If so, what mechanism delivers permanence?
Check the methodology and science
A credible removal claim rests on transparent methodology. I look for detailed, publicly available methodologies that explain how CO2 is measured, the baseline scenario, and the accounting for leakage (emissions shifted elsewhere) and permanence.
- Third-party standards: Is the project certified by recognized standards like Verra’s VCS (with a removal-specific methodology), the Gold Standard (for removals), or emerging bodies focused on removals like the Oxford Principles-aligned registries? Certification isn’t foolproof, but absence of alignment is a red flag.
- Peer-reviewed backing: Does the technique have peer-reviewed validation? Prominent methods like direct air capture (DAC) with permanent geological storage and accelerated mineralization have a stronger scientific grounding than early-stage approaches without field trials.
- Monitoring and verification: Are there clear plans for independent monitoring over decades? For removal projects, one-off verification is insufficient; ongoing measurement or robust proxies are needed to guarantee permanence.
Demand clarity on permanence and liability
Permanence is the make-or-break issue for removals. Carbon stored for five years isn’t equivalent to carbon stored for 1,000 years. I ask startups:
- What is the expected storage duration (years, centuries)?
- Who bears responsibility if stored carbon re-enters the atmosphere? Is there financial liability, insurance, or buffer pools?
- Is there a mechanism to re-retire credits if reversal occurs?
Some registries use buffer pools — a percentage of credits set aside to cover future reversals. That helps, but you should know the size of the pool and whether it’s actuarially sound. If the startup sells 100% of credits and counts on a tiny buffer, the risk to buyers is higher.
Look for transparent supply chains and storage details
Traceability matters. Good projects map the entire life cycle: where biomass came from, how it was processed, where CO2 is injected or mineralized, and how transport emissions are accounted for.
- For DAC: Where is the CO2 stored? Is it injected into secure geological formations with regulatory oversight (e.g., saline aquifers), or are they simply holding it above ground?
- For nature-based removals: Are there clear land-tenure records, and how is permanence enforced given climate risks like fire, pests, and land-use change?
- For enhanced weathering or mineralization: Are raw materials responsibly sourced? Mining for olivine or other minerals can create its own environmental and social harms.
Examine the registry and serial numbers
Always verify that the credits are registered on a credible public registry and that serial numbers match the claims. Some startups have been caught selling the same credit twice or retiring credits that were never issued. Ask for a link to the registry entry and check the retirement status yourself.
Assess counterparty and financial structures
I treat the contractual arrangement as an integral part of the due diligence. A messy cap table or a startup that uses complex SPVs to sell credits can create opacity.
- Who holds the title to the credits? Make sure the buyer’s contract explicitly transfers ownership and retirement rights.
- Are there escrow or trustee arrangements to ensure funds are used for long-term storage and monitoring?
- Are performance-based payments used? If the startup only gets paid after verifiable removal, that aligns incentives — though it can be riskier for early-stage firms.
Watch for marketing red flags
Some language choices reveal more than you’d think. Be wary of phrases like “carbon neutral” or “offset” when the company actually sells avoidance certificates or temporary removals. Also look out for overly precise claims about global temperature impact — removing small amounts of CO2 today won’t translate into measurable temperature changes on its own, and credible firms don’t overpromise that effect.
- Vague science or unverifiable images: if the website shows glossy photos without technical details, ask for the data behind the claims.
- Claims of “100% permanent” without explanation: permanence comes with caveats and costs; simple absolutes are suspicious.
- Celebrity endorsements and media splash: these can be legitimate, but they’re often used to distract from thin technical foundations.
Consider the broader climate strategy
Buying removal credits shouldn’t be a substitute for reducing emissions. I prefer startups and corporate buyers that embed removals as part of a wider strategy: deep decarbonization first, then high-quality removals to handle residual emissions. When a company uses removals as an excuse to avoid reducing fossil fuel use, that’s a governance and ethical red flag.
Use investor protections and pilot exposures
As an investor, I don’t put large sums into untested models. I recommend structured exposure:
- Start with a small pilot investment tied to demonstrable deliverables and third-party verification.
- Negotiate milestone payments based on verifiable removals and independent audits.
- Insist on transparency covenants in the investment agreement, including rights to technical audits and public reporting.
Practical resources and questions to ask
When I’m vetting a deal, I ask the startup to provide:
- Full methodology documents and links to any peer reviews.
- Registry entries and serial numbers for credits already issued.
- Details on monitoring, verification plans, and buffer pools.
- Insurance or liability arrangements for reversals.
- Examples of completed projects with independently audited results.
| Red flag | What to request |
|---|---|
| Vague permanence claims | Documentation of storage duration, liability and buffer mechanisms |
| No third-party verification | Independent audit reports and registry listings |
| Complex or opaque corporate structure | Clear ownership of credits and contractual transfer language |
| Overreliance on marketing | Technical appendices, peer-reviewed studies, and field data |
If you’re working from a corporate or fund perspective, consider hiring technical advisers with experience in DAC, carbon accounting, or soil science depending on the removal method. I’ve seen advisers help spot unrealistic assumptions that non-specialists would miss.
There are no guarantees in early-stage climate tech, but rigorous due diligence separates hopeful investment from avoidable losses. The best startups welcome scrutiny — they publish data, align with credible standards, and accept milestone-based financing. When those elements are missing, be prepared to ask hard questions or walk away.