Oil industry gets permanent tax break for methane capture—no emissions targets required
S. 1188 — FLARE Act · Filed by Ted Cruz (R-TX) · Introduced Mar 27, 2025 · Referred to committee
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What it does
This bill allows oil and gas companies to immediately deduct (expense) 100% of the cost of equipment that captures methane and other gases that would otherwise be burned off (flared) or released (vented) at drilling sites, and uses that gas for fuel, chemicals, electricity, or other products. The tax break applies indefinitely to new equipment placed in service after 2025, but excludes foreign entities deemed a national security concern.
Why we flagged it
The bill's operative mechanism is a permanent, 100% cost-recovery tax deduction for methane-capture equipment owned by oil and gas operators. Despite the environmental framing in the title (FLARE Act = Facilitating Lower Atmospheric Released Emissions), the bill contains no emissions targets, no performance requirements, and no sunset—it is a straightforward tax expenditure benefiting the energy sector.
What the text implies
- The bill defines 'flaring and venting mitigation system' to include equipment used for 'mining for digital assets' (cryptocurrency mining powered by captured gas), effectively subsidizing crypto operations at oil and gas sites with no environmental or public-interest justification.
- No requirement that captured gas actually reduce atmospheric emissions—operators can claim the deduction even if they simply compress and transport gas for sale, with no net climate benefit.
The full analysis lists 4 implications of this text.
Who stands to gain
oil and gas operators; natural gas producers; petrochemical manufacturers