Abstract: An internal combustion engine inducts no air from outside atmosphere and it discharges no gas into outside environment. The engine receives hydrocarbon fuel and oxygen, and its combustion gas consists mostly of carbon dioxide and water vapor. Carbon dioxide is captured, stored and subsequently sequestered by using it with water to create a hydrocarbon fuel that can be supplied back to the engine. In that way, the engine fuel is repeatedly regenerated and reused, and the engine operates in a carbon neutral mode of operation. Some of the combustion gas is used as a diluent gas in the engine. High specific heat and high density of that gas permit operation in high-efficiency overexpanded cycle without an increase in the engine size. Various methods of the engine control and operation are described, including methods to reduce pumping loss. Various modes of in-cylinder diluent gas formation are considered.