Fulfilling a campaign promise, US President Barack Obama reversed his predecessor’s ban on federal funding for embryonic stem research on Monday. From now on, American scientists may receive Federal government support for research on stem cells taken from embryos, whether they are clones or IVF spares. Most scientists were jubilant – 10 Nobel laureates flanked the President as he signed an executive order.

"What happened today is huge," says Kevin Wilson, director of public policy at the American Society for Cell Biology. "We've gone from having a small number of cell lines eligible for federal funding to having at least a few hundred."

In some ways, the President’s decision is less significant than the jubilation suggests. First of all, it leaves in place a major obstacle to cloning embryos, the 1996 Dickey-Wicker amendment. This bans funding for research that involves the destruction, injury or death of a human embryo. So to do therapeutic cloning, scientists will still have to obtain funding from state governments or private donors, although they can now use stem cell lines derived from cloned embryos.

This is why the New York Times complained that the job of dismantling President Bush's respect-for-embryos approach remains unfinished: “Congress should follow Mr Obama’s lead and lift this prohibition so such important work can benefit from an infusion of federal dollars.” But whether Congress will support cloning embryos is anyone’s guess.

Second, human embryonic stem cells are practically obsolete, at least for curing dread diseases and injuries like spinal cord injury, Parkinson's disease and diabetes. A breakthrough discovery in November 2007 showed that pluripotent cells with all of their potential could be created from ordinary skin cells – without the ethical baggage. And despite all the controversy surrounding embryonic cells, most people do not realise that no one has yet created a successful stem cell line from a human clone.

Many scientists now believe that cures will come from this new type of stem cell, induced pluripotent stem cells, and that embryonic stem cells will be used mostly for drug discovery, genetic research, and for benchmarking the performance of other types of stem cells.

Obama tactfully alluded to this in his eloquent speech. “At this moment, the full promise of stem cell research remains unknown,” he said, “and it should not be overstated... I cannot guarantee that we will find the treatments and cures we seek. No President can promise that.”

So the main effect of Obama’s decision was to boost the morale of an important constituency, the scientific community. To cement his image as a flagbearer of enlightened thinking, the President also set down guidelines for his Administration which guarantee scientists freedom from political interference.

The announcement, paradoxically, may not be good news for the biggest stem cell institute in the world, the California Institute for Regenerative Medicine. It was created in 2004 to work with embryonic stem cells because the Bush administration had been so intransigent. But now that the Federal government will be doling out funds, it is beginning to look superfluous, especially after California was forced to paper over a US$41 billion budget deficit with increased taxes, service cuts and borrowing. Jesse Reynolds, a policy analyst at the Center for Genetics and Society, told the New York Times: “The key question is whether the continued existence of CIRM is justified. Increasingly, signs are pointing to no, it’s not.”

And British scientists are worried that their competitive edge – the relative lack of restrictions on embryo research – has been eroded. Now that the money tap has been opened in the US, researchers may cross the Atlantic. This could lead to more pleas for government funding and for even more liberal legislation. “We absolutely have to streamline the regulation, or we will get nowhere,” said Robin Lovell-Badge, of the UK National Institute for Medical Research.