Last week the Environmental Protection Agency (EPA) announced its final renewable fuel standards for 2017, requiring that fuel suppliers blend an additional 1.2 billion gallons of renewable fuel into US gas and diesel from 2016 levels. The rule breaks down the requirements to include quotas for cellulosic biofuels, biomass-based diesel, advanced biofuel, and traditional renewable fuel.

This has left corn and ethanol suppliers in the Midwest quite happy and oil and gas suppliers less so.

Reuters points out that the aggressive new biofuel standards will create a dilemma for an incoming Trump administration, given that his campaign courted both the gas and corn industries. “Balancing oil and farm interests is likely to prove a challenge for Trump, who has promised to curtail regulations on the oil industry but is already being reminded by biofuel advocates of the importance of the program to the American Midwest, where he received strong support from voters on November 8,” Reuters writes.

While the EPA under the Obama administration has continually increased so-called renewable fuel standards (RFS), the standards were first adopted by a majority-Republican Congress in 2005 and then bolstered in 2007 with a requirement to incorporate 36 billion gallons of renewable fuel into the fuel supply by 2022, barring “a determination that implementation of the program is causing severe economic or environmental harm,” as the EPA writes.

Some biofuels are controversial not just for oil and gas suppliers but for some wildlife advocates as well. Collin O'Mara, CEO of the National Wildlife Federation, said in a statement that the corn ethanol industry that most stands to benefit from the EPA’s expansion of the renewable fuel standards “is responsible for the destruction of millions of acres of wildlife habitat and degradation of water quality.”

Still, the EPA contends that biofuels made from corn and other regenerating plants offer reductions in overall fuel emissions, if the processes used to make and transport the fuels are included. “Advanced biofuels” will offer “50 percent lifecycle carbon emissions reductions,” and their share of the new standards will grow by 700 million gallons in 2017 from 2016 requirements, the EPA says. Cellulosic biofuel will be increased by 81 million gallons and biomass-based diesel will be increased by 100 million gallons.

“Non-advanced or ‘conventional’ renewable fuel” will be increased to 19.28 billion gallons from 18.11 billion gallons in 2016. Conventional renewable fuel “typically refers to ethanol derived from corn starch and must meet a 20 percent lifecycle GHG [greenhouse gas] reduction threshold,” according to EPA guidelines.

Other kinds of renewable fuels include sugarcane-based ethanol, cellulosic ethanol derived from the stalks, leaves, and cobs leftover from a corn harvest, and compressed natural gas gleaned from wastewater facilities.

Gas suppliers have long warned that, unless automakers overhaul engines and gas stations redesign pumps, the US gas supply won’t accept more than a 10-percent blend of ethanol and other renewable fuels. But a Reuters analysis of vehicle sales and government data published in March concluded that nearly 20 percent of cars on the road today can handle fuel with 15 percent ethanol content, and that share is likely to grow.

Meanwhile, The Wall Street Journal reported this morning that oil, gas, and mining firms are slowly increasing spending as gas prices have held just above the very low prices that the market has experienced over the last dozen months. “Spending on mining machinery rose in the third quarter for the first time in two years, according to government data released last month,” the WSJ wrote. “Spending on structures related to exploration and drilling, meanwhile, fell at the slowest rate since the end of 2014 and looks poised for a small comeback.”