Failing an audit by dodging it (how? blocking the roads with trucks? pointing a gun at the auditor's agent?) is a failure.

Same solution in PoS slashing for stakers who don't maintain required latency: too bad, we don't care why, it was your job to do it right, your stake is slashed. (See the NashX exploding equilibrium for another example of this: the buyer doesn't give a s—t whatever excuses the seller might come up with, because it's cheap talk; the seller makes things right, or their stake gets burned. Period.)

Here are just a few things which come to mind – I’m sure there are others:

Flood with volume so there isn’t audit capacity & the time limit expires without a challenge.

Bribe the auditor.

The auditor turns out to be you under an alias.

Setup a mix of legit captured CO2 and something cheaper so when the auditor checks the easiest part to reach it appears valid.

Find something which will trigger the cheapest tests but costs less. Pocket the difference.

Truck the sequestered material from site to site, spending the proceeds long before anyone catches on.

Rely on the fact that since the auditing appears to be completely optional, most people will choose not to pay for it.

Bet on auditors being selected for being as cheap as possible and find the ones who will pass anything plausible.

Flood the system with fake challenges until people demand something like a quorum vote which increases the odds that someone won’t scrutinize your business too closely, or you and your pals try to convince everyone to adopt a more secure fork.

The key thing to remember is that a system which tries to be money is effectively its own bug bounty and it’s much harder to fix problems. Once you have money at stake every angle of the system will be under attack, and the security will come down to the real-world institutions backing it. Blockchains prevent silently rewriting history but that’s only one of the potential things people will try if there’s money at stake.

I'm in the same boat as you. Once there's money involved, I can imagine a lot opportunity for fraud:

-collecting fake "dust" that's the byproduct of another industrial process and minting tokens off it

-bribing or threatening violence against auditors

1. There is no such process, as already noted in OP. 2. Bribing or colluding with auditors only works until buyers or skeptics bring in further auditors, kicking off the forking game, as already noted in OP.

Whay incentive is there for buyers to bring in their own auditors? That costs money too, and if it's anything like the current situation many buyers are just looking to get the carbon off their books. What is their incentive to pay even more after burning the tokens to cover secondary auditing costs? Or for some other third party to insert themselves? And who oversees disputes when the trusted auditor disagrees with the challenge auditor?