US Senate passes landmark climate package

11th August 2022

The US Senate approved a $700bn (£577bn) economic package on Sunday, including the single-largest investment in climate action in the country's history.

The Inflation Reduction Act earmarks $369bn for climate action, which aims to slash US emissions by roughly 40% by 2030, against a 2005 baseline.

Measures include 10 years of consumer tax credits to make heat pumps, solar panels, and electric heating, ventilation, and air conditioning more affordable.

Households could also receive up to $7,500 in tax credits to buy new clean vehicles, and $4,000 to buy used clean vehicles.

Roughly $30bn in targeted grant and loan programs is earmarked for states and electric utilities to accelerate the transition to clean electricity, and more than $20bn is set aside to support climate-smart agriculture practices.

The package also includes over $60bn to on-shore clean energy manufacturing in the US, and a further $60bn in environmental justice priorities to drive investments into disadvantaged communities.

Although this is a significantly scaled-back version of Joe Biden's original $3.5tn 'Build Back Better' spending plan, the president welcomed the bill, saying that Democratic senators had “sided with American families over special interests”.

“I ran for president promising to make government work for working families again, and that is what this bill does – period,” he said.

“This bill also makes the largest investment ever in combatting the existential crisis of climate change. It addresses the climate crisis and strengthens our energy security, creating jobs manufacturing solar panels, wind turbines, and electric vehicles in America with American workers.”

The bill passed by a margin of 51 to 50 on Sunday, and comes after 18 months of intense wrangling.

It also includes major legislation on healthcare and corporation tax, allowing the government to negotiate lower prices for prescription medicines for the over-65s provided by the Medicare health insurance programme.

A minimum 15% tax will apply to most corporations that make more than $1bn a year in profits.

Speaker Nancy Pelosi said: “This landmark legislation is a major step forward in Democrats’ fight to put people over politics: lowering kitchen table costs, reducing the cost of Americans’ healthcare, creating millions of good-paying jobs and addressing the climate crisis.”

Image credit: iStock


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