Very simplified: farming and distillation is so extremely energy intensive, it's not clear whether producing one ton of bio ethanol fuel consumes more or less than one ton of diesel (or equivalent).

So producing bio ethanol is not a sustainability/ecology thing, it mostly gives farmers something to do.

If you wanted to save CO2 you'd slap solar panels on the fields instead of growing corn or whatever. Plants are rather bad at capturing solar energy and they need fertilizer and pesticides to grow and diesel to be planted and harvested. Then you lose a good part of the energy the plant captured until you have a product that you can burn in an engine.

With solar panels you get like 20x the energy out and you can have a meadow with high biodiversity around the panels. Growing a nice little forest, maybe with a couple of wind turbines in it if the location is windy, would probably also save more CO2.