The notion that biomass combustion is carbon neutral vis-a-vis the atmosphere because carbon released during biomass combustion is absorbed during plant regrowth is inherent in the greenhouse gas accounting rules in many regulations and conventions. But this ‘carbon neutrality’ assumption of bioenergy is an oversimplification that can result in major flaws in emission accounting; it may even result in policies that increase, instead of reduce, overall greenhouse gas emissions. This commentary discusses the systemic feedbacks and ecosystem succession/land-use history issues ignored by the carbon neutrality assumption. Based on recent literature, three cases are elaborated which show that the C balance of bioenergy may range from highly beneficial to strongly detrimental, depending on the plants grown, the land used (including its land-use history) as well as the fossil energy replaced. The article concludes by proposing the concept of GHG cost curves of bioenergy as a means for optimizing the climate benefits of bioenergy policies.