A bill that aims to help the US meet its climate targets has passed its final hurdle and is expected to be signed into law by President Joe Biden next week.
The Inflation Reduction Act is a dramatically scaled-back version of a previous bill backed by Mr Biden that was blocked by maverick Democrat senators, but will still lead to major reductions in green house gas emissions, say experts.
Having cleared the Senate on Monday – with vice president Kamala Harris having to use her vote to push it through as the vote was split 50-50 – the bill was passed by the lower House of Representatives on Friday.
Tweeting a picture of himself smiling as he watched footage of the passing of the bill in Congress, Mr Biden said on Twitter: “The choice we face as Americans is whether to protect the already-powerful or find the courage to build a future where everybody has a shot.
“Today, I proudly watched as House Democrats chose families over special interests.”
He went on to say: “I want to thank Congressional Democrats for supporting the Inflation Reduction Act. It required many compromises. Doing important things almost always does. I look forward to signing it into law.”
The bill also aims to lower medical costs for older Americans but raises some corporate tax rates and introduces other measures to recoup the cash needed to pay for it all.
Republicans attacked the bill, saying that it was a spending “wish list” that would hurt an economy weighed down by inflation, kill jobs, raise energy costs and undermine growth at a time when the economy is facing a potential recession.
But House Speaker Nancy Pelosi, the chamber’s top Democrat, said: “Today is really a glorious day for us. We send to the president’s desk a monumental bill that will be truly for the people.”
Economists say the legislation could help the Federal Reserve battle inflation but do not expect a sizeable impact on the economy in coming months.
The bill plans to make available $370bn for climate-focused spending, with incentives to encourage purchases of electric vehicles and energy-efficient appliances, and to motivate new investments in wind and solar power.
The United States pledged to slash its greenhouse gas emissions to half their 2005 levels by 2030 at last year’s Glasgow COP26 climate summit.
Modelling by the Repeat Project at Princeton University says the bill will double the amount of new, clean electricity-generating capacity coming online by 2024.
That would help put the US on course to achieve its pledge.
Environmental groups have broadly embraced the bill, but have said rules that would only allow the federal government to authorize new wind and solar energy developments on federal land when it is also auctioning rights to drill for oil and natural gas will prolong US use of fossil fuels.
The provision was introduced by one of the Democratic senators who opposed Mr Biden’s original bill, Joe Manchin, who represents coal-producing West Virginia.
The legislation also allows the federal Medicare health plan to negotiate lower prices for prescription drugs – in the same way the NHS negotiates drug prices in the UK .
Juliette Cubanski, deputy director of the Medicare program at the Kaiser Family Foundation, said this would lower drug costs for the government, employers and patients.
The non-partisan Congressional Budget Office estimates Medicare will be able to save $101.8bn over 10 years through negotiations.
The pharmaceutical industry claims price negotiation will limit innovation.
It comes amid reports the pharmaceutical industry spent more than any other sector last year on lobbying in Congress – at least $142m.
Democrats also say the bill will reduce the budget deficit.
What’s in the bill?
£375bn over 10 years to encourage industry and consumers to shift from carbon-emitting to cleaner forms of energy.
That includes $4bn to cope with drought in the west of the US.
Spending, tax credits and loans will aim to encourage the take up of:
• Clean energy technology, like solar panels, electric cars and energy-efficient appliances
• Consumer efforts to improve domestic energy efficiency, such as retrofitting homes with heat pumps and electric water heaters
• Emission-reducing equipment, such as carbon capture, for coal- and gas-powered electricity plants
• Air pollution controls for ports and low-income communities
• Programmes to enrich soil and other efforts to promote climate-friendly agriculture
Experts say that combined with last year’s $1.2 trillion infrastructure bill, the Inflation Reduction Act amounts to the greatest injection of government cash for energy programs since the Manhattan Project.