An effective electrochemical carbon dioxide reduction reaction (eCO₂RR) requires the discovery of a catalytic system that is highly active and selective for multi-carbon products together with superior CO₂ diffusion at a catalyst layer to minimize the reduction barriers. Here, we found a catalytic system that uses molybdenum phosphide (MoP) nanoparticles covered by imidazolium-functionalized ionomer (Im) that promotes CO₂ diffusion at the catalyst layer toward the catalyst surface, where CO₂ is reduced to ethanol (C₂H₅OH). The electrochemical results with the MoP-Im co-catalyst show a C₂H₅OH production Faradaic efficiency and a cathodic energy efficiency of 77.4% and 63.3%, respectively, at a potential as low as − 200 mV vs. RHE. The electrochemical experiments along with our physicochemical characterizations indicate that the Im improves CO₂ diffusion and balances water content resulting in a higher CO₂-to-water ratio at the catalyst layer and fine-tunes the electronic properties of Mo atoms at the MoP surface. In-situ Raman spectroscopy reveals that a high number of adsorbed *CO intermediates on the surface and a higher binding strength of *CO intermediates on the Mo surface sites in the presence of imidazolium molecules are the main reasons for a superior C-C coupling and thereby the improved C₂H₅OH formation.