The term refers to any process or product that has a zero balance with respect to the amount of carbon adsorbed or sequestered and the amount released back into the atmosphere. The accounting must take into consideration all carbon sources used to produce the final product, which is why most instances of plant-based biofuel production, for example, are not considered carbon neutral.
Although the crops grown to produce fuels, such as ethanol and biodiesel, are only capable of emitting as much carbon as they absorb during growth (thereby making them carbon neutral), the use of non-renewable energy sources during production may ultimately add more carbon to the atmosphere than it removes. For example, the addition of petroleum-based fertilizers to energy crops and the consumption of oil during transportation, may render some biofuels carbon positive.
For more information, see Biofuels and Greenhouse Gas Reductions
Andrew R. Moss, SARE Fellow, University of Maryland
