Carbon dioxide (CO2) capture and utilization (CCU) aims at reducing both greenhouse-gas emissions and fossil-resource depletion. Assessment of these aims requires quantitative environmental evaluation. So far, evaluation of CCU is based on ad hoc criteria such as the amount of CO2 utilized, simplified CO2 balances or CO2 storage duration. Albeit these criteria may be useful for very early stages of potential research pathways, we show that they are insufficient as basis for decisions on implementations and that they may lead to even qualitatively wrong environmental evaluation of CCU. Therefore, a holistic evaluation using life-cycle assessment (LCA) is mandatory. However, the application of LCA to CCU is subject to methodological pitfalls: (i) utilized CO2 might intuitively be considered as negative GHG emissions; (ii) since CCU usually generates products both in the capture and in the utilization process, choices exist how to allocate emissions to the individual products and (iii) CO2 storage duration is not reflected in traditional LCA. To avoid the existing pitfalls, we provide a systematic framework for LCA of CCU in which (i) the utilized CO2 is correctly considered as regular feedstock with its own production emissions; (ii) recommendations for obtaining product-specific LCA results for CCU processes are given and (iii) the CO2 storage duration is incorporated into a time-resolved global warming metric. The developed framework is illustrated by simplified LCA of CO2 capture from the atmosphere and from coal power plants, and of CO2 utilization for methanol and polymer production. Overall, the presented framework allows for the sound environmental evaluation of CCU.