Managing of wastes rich in lignocellulose creates the opportunity to produce biofuels that are in full compliance with the principles of sustainable development. Biomass, as a suitable base for the production of biofuels, does not have to be standardized, and its only important feature is the appropriate content of lignocellulose, which assures great freedom in the selection of input. Biobutanol, obtained from this type of biomass, can be used as fuel for internal combustion engines, including diesel engines. In the era of strict environmental protection regulations, especially concerning atmospheric air, any new fuel, apart from good energetic properties, should also show beneficial ecological effects. This study investigates the carbon dioxide emissions from biobutanol powered diesel engine by means of use of the simulation model. The parameters of a real passenger car powered by a diesel engine were used for simulation carried out accordingly to the WLTP (Worldwide Harmonized Light Vehicle Test Procedure) approval procedure as the current test for newly manufactured cars. The results obtained for biobutanol were compared with simulated exhaust emissions obtained for conventional diesel and with FAME (fatty acid methyl esters)—the most popular biofuel. Biobutanol, in spite of its higher consumption, showed lower direct carbon dioxide emissions than both: the conventional diesel and FAME. In addition, a LCA (life cycle assessment) was carried out for the fuels and vehicles in question using the SimaPro package. Therefore, the implementation of butyl alcohol as a fuel provides favorable environmental effects. This result gives arguments towards biofuel production management indicating that implementation of biobutanol production technology mitigates carbon dioxide emission, as well as promotes lignocellulosic resources rather than edible parts of the plants.