Following up on California’s announcement last week, the US Environmental Protection Agency proposed the nation’s first greenhouse gas standards for biofuels on Tuesday (AP)

The much-anticipated analysis confirms that corn ethanol often increases greenhouse gas emissions compared to gasoline, largely due to the impact of indirect emissions. These result from foreign farmers cutting down forests and planting new crops in response to rising grain prices. That said, the analysis suggests that there is plenty of room for improvement in the production of corn ethanol (for instance, by switching to natural gas or biomass as a heat source during production). Corn ethanol also performs better over the long haul, gradually overcoming the initial spike in emissions due to deforestation.

EPA will use these standards to implement the US biofuels mandate, which requires companies to meet various greenhouse gas requirements as they ramp up production in the coming years. It came as part of a broader set of White House initiatives that seem to offer up a little something for everybody. The administration underscored its support for the industry by creating a high level biofuels working group, while announcing $786.5 million in stimulus funding to promote a range of biofuel research and development activities.

Environmentalists are pleased to see that the administration isn’t ignoring the latest science regarding ethanol’s unintended impacts. The Renewable Fuels Association, an ethanol trade group, is pleased to see ample wiggle room in the way the numbers work out. And according to Reuters, investors are pleased to see that the administration isn’t turning its back on biofuels altogether.