I'd say this is less about reducing CO2 and more about making cities and towns nicer places to live and helping people live healthier lives.
I have no idea what the stats on this are, but I'd guess that the amount of emissions saved in people cycling more vs using a petrol car or electric car wouldn't actually be much compared to measures that reduce emissions from goods transport.
Private vehicles are by far the greatest share of transport-related CO2 emissions, more than double road-based freight . You can just easily look this up.