The FLARE Act: Permanent 100% Tax Write-Off for Gas Capture Equipment Starts 2026

The Facilitating Lower Atmospheric Released Emissions Act, or the FLARE Act, is a short piece of legislation focused entirely on changing the tax code to incentivize energy companies to stop wasting natural gas. What it does is simple but powerful: it grants permanent, 100% immediate tax expensing for equipment designed to capture or utilize gas that would otherwise be burned off (flared) or released directly into the air (vented).

The Immediate Write-Off: What Full Expensing Means

When a business buys a major piece of equipment—say, a $1 million compressor—they usually have to spread that deduction out over several years, a process called depreciation. Section 2 of the FLARE Act tears up that rule for specific energy equipment. By amending Section 168(k) of the Internal Revenue Code, it allows companies to write off 100% of that $1 million cost in the year they buy it. This is a massive, permanent financial incentive, kicking in for property placed into service after December 31, 2025.

For the energy sector, this is like getting a perpetual, fast-track discount on environmental upgrades. If a company is on the fence about investing in a system to capture waste gas, this tax break makes the math a lot easier, immediately boosting their cash flow. The goal is clearly to reduce methane emissions and gas waste by making the necessary infrastructure investment a no-brainer.

What Counts as 'Mitigation' Equipment?

The bill is very specific about what qualifies as "flaring and venting mitigation systems." It’s not just about capturing the gas; it’s about what you do with it next. The equipment must be designed to collect the gas and then put it to use. This includes systems that compress the gas for transport, turn it into petrochemicals, generate electricity, or even power computers for digital asset mining (yes, that means crypto mining).

This broad definition is where the policy gets interesting. A drilling company might install a system that technically reduces flaring, but its primary function might be to feed cheap, stranded natural gas directly into a co-located data center or Bitcoin mine. While the environmental benefit of stopping the waste gas is achieved, the tax break is also being used to subsidize a new, high-energy consumption business model. This is a crucial detail for taxpayers to track: is the primary outcome cleaner air, or cheaper power for new operations, or both?

The Exclusions and the Cost to Taxpayers

There is one major restriction: this 100% deduction is explicitly unavailable if the equipment is installed by a "foreign entity of concern," referencing a definition found in separate legislation (42 U.S.C. 19221(a)). This is a clear move to prevent certain foreign entities from benefiting from this significant tax subsidy, linking the environmental incentive to national security and competitive concerns.

Because this is a permanent 100% expensing provision, it means the federal government is immediately giving up a large chunk of potential tax revenue every time a company purchases this equipment. For regular taxpayers, this translates into a permanent, ongoing cost to the U.S. Treasury. While the environmental benefits—less wasted energy and reduced methane emissions—are clear positives, the trade-off is a permanent reduction in the corporate tax base to achieve those goals.