That's not what the data says, at least in the US. We consistently see a net change of about 2 million people per year moving out of cities and into the surrounding suburbs: https://www.pewresearch.org/fact-tank/2021/12/16/in-2020-few...
And the desire to live in cities is shrinking as well, now at under 20%: https://www.pewresearch.org/social-trends/2021/12/16/america...
What do you mean in regards to CO2? I'd suggest that many people living a rural lifestyle completely offset their CO2 footprint due to carbon sequestration. I know I have enough trees and vegetation on my acreage to completely offset my carbon emissions. But, of course, to counter your argument I really only need to offset the extra emissions that come with driving an extra n miles into the city.
The infrastructure-to-population cost ratio of urban areas is way, way higher than rural areas. A meter of footpath, road or sewer in a city is reused by (just spitballing numbers) 10x as many people compared to a suburb, and probably 100x vs a rural area. Infrastructure is just much cheaper in cities relative to the served population, because so much less land area needs to be covered.
Since people generally pay the same taxes no matter where they live, the net result is cities generally fund a lot of infrastructure for other areas, as they are so much more efficient.
There's nothing necessarily wrong with this for genuinely rural areas - we do need farms etc, so infrastructure built to serve them is well spent. The issue arises when we sprawl with suburbs, as they don't serve any particular purpose that couldn't be fulfilled by a dense city, but cost much more in terms of infrastructure expense.
I have no problem with people living in suburbs, so long as they bear most of the cost of living that lifestyle, rather than dense urban areas funding them.