Definition: Carbon neutral is a term used to describe fuels that neither contribute to nor reduce the amount of carbon (measured in the release of carbon dioxide) into the atmosphere.
Pure biofuels (ie. biodiesel, bioethanol and biobutanol) are carbon neutral since the C02 released by being burned is absorbed by plants. In other words, the C02 released by burning a gallon of biodiesel today is absorbed from the atmosphere by soybean plants being grown to produce tomorrow’s next gallon. No net carbon added.