Producing low-carbon-intensity hydrogen in Arizona currently costs between $4.50 and $12 per kilogram, making it expensive compared to traditional fuels. A new federal tax credit offers up to $3 per kilogram to help lower these costs, but recent Treasury guidelines maintain strict rules that limit Arizona’s ability to fully leverage its solar resources and infrastructure. While the rules provide some flexibility, the final framework makes it challenging for Arizona projects to fully benefit from the incentive. AzCaNE will continue convening stakeholders to navigate these conditions and promote sustainable hydrogen in Arizona’s carbon-neutral future.

Supplying all heavy-duty trucking and 5% of Arizona’s electricity with low-carbon-intensity hydrogen in 2050 would consume around 15,500 to 34,250 acre-feet of water each year. This equals roughly 0.5 % of today’s statewide demand, or 4 to 9 gallons per kilogram of hydrogen. Sustainable supply is influenced by groundwater drawdowns, scarce reclaimed water, complex surface-water rights and similar factors. AzCaNE convenes utilities, tribal nations, industry and regulators to navigate these trade-offs and ensure future hydrogen projects align with Arizona’s long-term water resilience.

Check out our infographic summarizing AzCaNE’s recommendations and position on the Treasury’s 45V proposed clean hydrogen production tax credit rules.

Check out our infographic showcasing the findings from our Water Considerations Related to Clean Hydrogen in Arizona white paper.