Ethanol is terrible for the environment. It's driven up corn prices, not just in the U.S., but in Mexico and Central America. This will immediately cause the clear-cutting of remaining rainforest to plant the now immensely profitable corn crop.
I've traveled through Central America. It was bad enough seeing subsistence farmers cutting down the rainforest to clear land to feed their families. Ethanol demand in the U.S. will make the clear-cutting much faster and more far-reaching.
What about using Brazilian cane sugar instead? Perfect. They'll clear-cut the Amazon rainforest.
You think burning gasoline causes CO2 levels to increase? That's nothing compared to what chopping down the Amazon will do.
Law of unintended consequences. Learn it.