Bioenergy is commonly said to be “carbon neutral”, but this is an unhelpful term because it is ambiguous, and used differently in different contexts. Within the biospheric carbon cycle, bioenergy can be carbon neutral because the carbon that is released during combustion has previously been sequestered from the atmosphere and will be sequestered again as the plants regrow, i.e. if sustainably produced. However, the full supply chain must be considered, and all emissions associated with the production, processing, transport and use of bioenergy need to be included. Particularly harvesting, transport and processing generally involves fossil energy use. Nevertheless, analysis shows that the fossil energy used in the supply chain is generally a small fraction of the energy content of the bioenergy product, even for woody biomass transported over long distance, e.g. between North America and Europe.

The important issues in terms of climate impacts relate to how the forest carbon cycle is affected by management changes to provide biomass for bioenergy in addition to other forest products. With respect to the forest, the key issue is the net assimilation of carbon (carbon sink strength) and associated changes in carbon stock in forest soils and vegetation and/or harvested wood products, and carbon losses through natural disturbances such as fires or insect attacks.