|MadSci Network: Biochemistry|
This is a good question and for the most part you are correct, but you fail to consider a few additional carbon costs. How about fertilisers used? How are you going to transport the fuel? You are going to need a lot of plants to make a feasable supply of bioethanol so you will probably need farming equipment; how are you going to power that? In terms of the fuel itself it seems that, yes, every carbon molecule used in making the fuel is released and recycled.
Other points to consider--
--Ethanol is not as efficient as octane, so you need to use more of it to go the same distance, which means higher costs of transporting the material, farming it, etc. Its lack of efficiency may outweigh its advantages.
--It's going to take energy to transport tanks to gas stations that can hold ethanol since it is mildly corrosive. In other words, gas stations need to be outfitted to sell the stuff (and so do most cars for that matter).
--Not all gas stations may have the fuel, causing people to drive out of the way to fill up, resulting in more ethanol being used.
Perhaps I am going into too much detail, but I think the reasons above are why you dont see a lot of ethanol stations in the US right now. I would at least address these questions in your answer; it makes for a more realistic answer. A lot of people dont think to consider these factors.
Try the links in the MadSci Library for more information on Biochemistry.