Final answer:
Biomass is the fuel that directly produces CO₂ but is considered carbon neutral.
Step-by-step explanation:
The fuel that directly produces CO₂ but is considered carbon neutral is Biomass. Biomass refers to organic matter, such as wood, crop residues, and waste materials, that can be burned to produce heat or converted into biofuels. When biomass is combusted, it releases carbon dioxide, but this is considered carbon neutral because the carbon emitted was taken in from the atmosphere during the process of photosynthesis.