It goes back to where the tree extracted it from: atmosphere.

That's why it is usually considered carbon neutral.

True - but the management, production and transport of the wood pellets that go on to be burnt, produces more co2.

Plus burning stuff isn't that great a way to make power, especially wood - if you have ever tried to heat a house with wood verses a coal fire you'll understand.

Right now the wood pellets are just a way to skirt the rules - I doubt they'll be part of the mix for long, as solar/wind drops in price, along with cheap and reliable storage.

It's absorbed by new trees, planted to replace the ones cut down.