Life processes are fuelled by carbon compounds which are oxidized to CO2 (carbon dioxide), the latter is exhaled by all animals and plants. Conversely, CO2 is assimilated by plants during photosynthesis to build new carbon compounds. See also this comment about photosynthesis and global warming
CO2 is produced by the burning of fossil fuels, which derive from the preserved products of ancient photosynthesis. The atmosphere exchanges CO2 continuously with the oceans. Regions or processes that predominantly produce CO2 are called sources of atmospheric CO2, while those that absorb CO2 are called sinks.
The following graph shows the annual carbon flows and storage in billion metric tons
(Source: NOAA Earth System Research Laboratory
While CO2 is only a very small part of the atmosphere (0.04%), it plays an important role in the energy balance of our planet: CO2 in the atmosphere acts like a blanket over the planet by trapping long-wave radiation, which would otherwise radiate heat away from the planet (greenhouse effect
). As the amount of CO2 increases, so will its warming effect. CO2 is the largest contributor (currently 63%) to this effect by long-lived gases and its role increases each year. The additional burden of CO2 in the atmosphere will remain for a very long time, of the order of thousands of years, if we have to rely on the natural mechanisms of erosion and sedimentation to process the added CO2.
Source and more details: http://www.esrl.noaa.gov/research/themes/carbon/