FLARE Act Offers Permanent Tax Break for Capturing Waste Gas Starting 2026: Crypto Mining Included?

The "Facilitating Lower Atmospheric Released Emissions Act," or FLARE Act, proposes a significant change to the U.S. tax code for the energy sector. Starting for equipment put into service after December 31, 2025, this bill would allow companies to permanently take an immediate, 100% tax deduction—known as full expensing—for the costs of systems designed to mitigate natural gas flaring and venting. Think of it like buying a major piece of equipment for your business and getting the entire tax write-off in year one, instead of spreading it out over several years; this bill makes that permanent for specific energy gear.

Turning Waste Gas into... What Exactly?

So, what kind of equipment gets this tax break? The bill defines "applicable energy property" pretty broadly. It covers systems that capture natural gas that might otherwise be flared (burned off) or vented (released directly) at production sites. The captured gas must then be processed in specific ways, including compressing it, liquefying it, using it to produce petrochemicals or fertilizer, converting it into liquid fuels or electricity, or using it to power other oilfield equipment. Here's where it gets interesting: the definition also explicitly includes using the captured gas to provide computational power or for "mining for digital assets." That means a company could potentially get a full tax write-off for installing equipment that captures waste gas specifically to power cryptocurrency mining operations.

Good for Emissions, or Good for Business?

On the surface, incentivizing companies to capture methane—a potent greenhouse gas—instead of releasing or burning it seems like an environmental positive. Less waste gas potentially means lower emissions from specific oil and gas operations. However, the structure raises questions. By making these mitigation systems cheaper through tax breaks, does it inadvertently make marginal oil and gas drilling operations more profitable? Critics might argue that while it reduces waste per unit of gas extracted, it could encourage more overall extraction, potentially undermining broader climate goals. Furthermore, this permanent tax break represents an ongoing cost for taxpayers. The bill does specify that "foreign entities of concern" (as defined in existing law) are ineligible for this tax benefit, aiming to keep the financial incentive within certain geopolitical boundaries.