With 4.5 billion passenger
trips taken each year and more than 16 million planes
taking off annually in the U.S. alone, commercial
airlines provide affordable travel on a global scale. But the aviation industry
has a big issue - emissions. Aircraft are responsible
for 2.5% of global CO2 emissions, and the problem
is growing. Aviation is one of the few
sectors whose emissions are actually set to grow as
opposed to decrease over the next few decades. To combat this, the industry
has agreed to try and achieve net zero emissions
by 2050. We've seen a much bigger
push from airlines and from companies throughout the
aerospace supply chain that in the long term, the
biggest challenge facing the industry is emissions. The airlines are constantly
asking the manufacturers, we want to burn less fuel.
It's not just about being green, it's millions of
dollars difference, any fuel savings that they have. Electric aircraft are being
explored, but until more energy-dense batteries
exist, they are limited in range. You can't carry enough
batteries to sustain flight because they're just too
heavy. Even with the next generation of batteries,
unfortunately. But there could be a
solution that rivals the power of fossil fuels
without the negatives - hydrogen. Hydrogen has the
highest energy per mass of any fuel and doesn't
release any emissions. Hydrogen is about 3 to 4
times lighter than jet fuel on an equivalent energy
basis. In fact, it is the lightest
weight energy carrier outside of nuclear fuels. This is why hydrogen
already gets used as a fuel in space launch. The promise of a
zero-emission plane that could compete with
jet-fueled aircraft has everyone from big players
like Airbus to new startups exploring the technology. There's been some successful
flights, in fact, but it's all been on small regional
aircraft. And with the aviation market
expected to grow, this new technology could represent
a big opportunity. We have today $1.5 trillion
market that we are transforming and we need to
transform. The growth rates are some
of the highest of all transportation types. All the technology is here
today. Now is the perfect time to
use hydrogen to overcome this issue of climate
change. Hydrogen in aviation has
been around for decades. The Department of Defense
looked at hydrogen powered aircraft back in the late
1950s. The Soviets actually flew an
airliner, the Tupolev 155, in 1988 on hydrogen. And there have been a
couple of smaller aircraft flying on fuel cells in the
early 2000s. To power an aircraft, it can
be used in two ways. Hydrogen can be used to
directly power the turbines, it can just be burnt. Or it
can be used in conjunction with a fuel cell that's
creating electricity. Hydrogen fuel cells, they
are at least currently more efficient than hydrogen
combustion engines. And while hydrogen is
expensive today, over time it could be cheaper than
conventional jet fuels. Fossil fuels depend on ever
more expensive extraction. Contrast that with green
hydrogen, which is produced from renewable electricity
that has pretty much zero marginal cost, and the
fully loaded cost is constantly reducing. The Inflation Reduction Act,
passed in the summer of 2022, provides renewable
energy and clean hydrogen plants a tax credit of 2.6
cents per kilowatt hour and up to $3 per kilogram of
hydrogen through 2032. If you factor in the IRA and
the escalated oil prices today, green hydrogen is
already superior to jet fuel, in terms of cost. But even if you take out
the subsidy and you take out oil price shocks, as maybe
transient effects, we would expect there to be parity
just on the basis of falling renewable electricity
prices. However, the nature of
hydrogen does make it tricky when used in an aviation
environment. Hydrogen does have a little
bit of an Achilles heel, which is volume, and you
can't put it in the wing of the airplane. If you store it as a gas, it
takes up an enormous amount of volume. If you have to
store it as a liquid, you're storing it minus something
like 425°F. There are a lot of
durability challenges with fuel cells. What happens
when the aircraft tilts and rolls? The fuel cell has to
stay humidified and that can be a challenge. Numerous companies are
experimenting with hydrogen technology, with the
biggest being aircraft giant Airbus. Airbus has been looking at
hydrogen for a long time and within the last years has
increased that focus, looking at both hydrogen
fuel cell and hydrogen combustion, and also a
hybrid configuration between hydrogen fuel cells and
combustion. Airbus is looking at
hydrogen currently through several different
initiatives. One of them is the ZeroE aircraft that
they are trying to develop, and that would be more of a
hybrid model where it is fueled by hydrogen and also
traditional combustion engines. Outfitting the
A380, its biggest airplane, the biggest commercial
airplane that's out there, adding on a hydrogen
engine. For this test it's working
with engine maker CFM International, a joint
venture between GE Aviation and Safran. CFM is working
on a new design they say could cut emissions by more
than 20% of today's levels and be compatible with
sustainable aviation fuel and hydrogen. When first
announced in 2020, Airbus projected its hydrogen
concepts could enter service by 2035. They've walked that back a
bit and they don't have current, you know, an
announced program that the next aircraft will be flown
using hydrogen or anything like that. ZeroAvia, founded in 2017,
is a UK-based hydrogen electric aircraft startup
that has raised $140 million from airlines and notable
investors. United, American, British
Airways, Alaska Airlines, Shell is one of my major
investors and they are the largest jet fuel supplier
today. They are looking to provide
all the hydrogen as well. The company is focused on
building hydrogen-electric propulsion technology. First and foremost, we are
engine developers and manufacturers. We also
bring infrastructure to the airports with partners. We've presold $10 billion
worth of our engines. It flew its first prototype
in 2019 and performed a test flight of its full-size
model in early 2023. 20 seat aircraft, full size
engine, representative of our launch platform. We actually have done four
test flights already on that platform. The fact that ZeroAvia had a
successful test, that is a huge leap forward and the
next step with that is, it's more testing. It's hoping to bring a 10 to
20 seat aircraft to market by 2025, with plans to
release a 70 seat aircraft in 2027. We've set up seven aircraft
manufacturers as partners, including our launch
partner, Textron, which is the world's largest
manufacturer of small commercial planes. The
larger engine, we already have a lot of tests that
were done on the technology around that. Universal Hydrogen, founded
in 2020 and based in Hawthorne, California, is
another upstart working on hydrogen planes. It is led
by Paul Eremenko, former chief technology officer at
United Technologies and Airbus. I've worked with a broad
range of technologies from batteries to biofuels and
synthetic fuels to hydrogen, and came to the conclusion
that hydrogen is probably the best answer. The company has raised about
$100 million to date. Our series B Round was led
by Tencent. We have Airbus as a
strategic investor. We have GE Aviation, we
have American Airlines, as well as JetBlue. We also
have Toyota. It's developing both the
hydrogen fuel infrastructure and the technology to
retrofit aircraft. So this is our hydrogen fuel
cell powertrain testbed. We have six fuel cells here
providing nearly one megawatt of fuel cell
power. And then we have a 750
kilowatt electric motor at the very front of the Iron
Bird. And this simulates our
aircraft powertrain and this is where we vet all the
technology on the ground before we integrate into
the aircraft. For its retrofit, it chose
to start with the ATR 72, a 50 to 60 passenger regional
plane. It takes about two megawatts
of power on each side of the airplane to power that
aircraft. And so we partnered with
Plug Power and we created a conversion kit that
replaced their existing jet engine with a fuel cell and
an electric motor. Universal Hydrogen
successfully conducted a test flight of this
aircraft in March. We only converted one side
of the airplane, we kept the other one as a conventional
engine for safety of flight. And that is the largest
airplane ever to fly on hydrogen fuel cells. And we were, in fact, able
to throttle back the jet fuel powered engine and was
able to cruise exclusively on hydrogen power. Universal Hydrogen is
planning to test later this year with liquid hydrogen. And that's a really
important step, too, because liquid hydrogen has a much
higher density. The company is aiming to
bring its conversion kit to the market in late 2025. It says it already has
several customers and is planning to launch with
U.S. Based Connect Airlines, and
Amelia, a regional airline in France. We have 16 customers to date
across whom order book totals 247 airplanes. So that's about $1 billion
order backlog for airplane conversions and a little
over 2 billion in hydrogen fuel services over the
first decade of operation. Realizing the vision of
hydrogen planes won't be easy, and experts believe
that proposed timelines are ambitious. It could be years before we
actually see this flying commercially. Given the technology
constraints of fuel cells, it may only be viable for
small and medium aircraft. The infrastructure required
to power a plane with it could take up a lot of
room. One thing that airlines might have to do
is take seats out. Given the cost of hydrogen
and the reduction in seats, flying on hydrogen will be
more expensive than jet fuel unless there are carbon
taxes that increase the price of flying with
current jet fuel. Competing with larger
engines is challenging as they operate more
efficiently. What you're competing
against actually is getting better. And that's where the
majority of the pollution in aviation comes from. Large commercial airplanes,
the typical airplanes that are flown by airlines in
the world, they emit about 93% of the carbon of the
industry. Have to go to a hydrogen
combustion type approach with a regular jet engine
that's just adapted for hydrogen. Once the technology is
validated, it could take several years to get
through regulators. There is a really high bar
to getting any of this technology approved, even
with very conventional aircraft, it can take years
to get through regulators. Another major hurdle is
building out the infrastructure for hydrogen
fuel. Universal Hydrogen is
aiming to address this by leveraging standardized
cargo modules. Our idea was let's put
hydrogen in these modular capsules. They plug
directly into the airplane and become the primary fuel
tank for the duration of the flight. We're looking at a liquid
hydrogen module. These fit perfectly in ISO
standard shipping containers, and then we can
use the existing intermodal freight network to
transport hydrogen to airports around the
country, around the world. We see the total addressable
market for fuel services, which is our core business
as a company, is about $2.5 billion a year. And there is the issue of
hydrogen production itself. In order to leverage its
benefits, hydrogen needs to be synthesized with zero
carbon emissions. Currently, 98% of hydrogen
is made in a way that uses fossil fuels. Green hydrogen is where you
actually use a reusable source, wind energy, solar
energy, to make hydrogen. But today that doesn't
really exist in any significant volume at all. I have spent much of my
career studying the alternatives. I've done a
lot of work on battery-powered electric
aviation. I've done a lot of work on
so-called sustainable aviation fuels. There just
isn't another option. You need to move to the
sustainable energy source, sooner or later. And once
you do the analysis, the only way you're going to do
this is going to be through hydrogen. I personally have done all
the case studies and numerical analyses. Smarter
people than I have also done these studies and vetted
these calculations. And we all firmly believe
that this is a viable option to decarbonize aviation.
