23 July 2024

GreenAir News

Reporting on aviation and the environment

Hydrogen aviation pioneer Universal Hydrogen fails, citing lack of funding

Universal Hydrogen, a high-profile startup developing zero emission aircraft propulsion systems, has collapsed, despite multiple big-name investors. The California-based company was developing a novel modular fuelling system through which canisters of hydrogen would be delivered to airports and loaded directly onto the aircraft they would power, negating the need for fixed fuelling infrastructure. But late last week the company’s President, Mark Cousin, wrote to shareholders to advise that due to insufficient funding, the company would be shut down. “While we have been pursuing new capital for some time and evaluating various strategic options, we have been unsuccessful in closing any new investment,” he said. “Therefore our board has made this decision.”

An industry executive familiar with Universal Hydrogen said the company had been too ambitious in developing both hydrogen supply and zero emission propulsion systems when its main competitor, ZeroAvia, was focused purely on making hydrogen-electric powertrains to replace fossil-fuelled engines in existing aircraft. The executive said Universal should have concentrated on just one of those objectives to accelerate certification but predicted the company’s technology could still be acquired and refined by other zero-emission aviation aspirants.

The Universal Hydrogen business plan was built on the premise that there was insufficient hydrogen refuelling infrastructure at airports and existing technology was too slow to efficiently fuel aircraft. The company promoted itself as a plug-and-play solution that did not rely on airports providing hydrogen fuelling infrastructure and was targeting 2026 for its product’s entry into service. It raised around $100 million in funding from big-name partners including Airbus Ventures, American Airlines, JetBlue Ventures, GE Aviation and Toyota Ventures, but still needed more to progress certification. It never came.

The company had said its mission was “… building a flexible, scalable and capital-light approach to hydrogen logistics by transporting it in modular capsules over the existing freight network from green production sites to airports around the world.” It was also developing and testing conversion kits to retrofit existing regional aircraft with hydrogen fuel cell powertrains.

In addition to retrofitting turboprop aircraft with zero emission propulsion systems and reconfiguring them to carry hydrogen fuel pods, Universal Hydrogen said orders for its conversion kits would also include an agreement to supply hydrogen fuel services for the aircraft. 

Co-founder Paul Eremenko, a former chief technology officer of both Airbus and United Technologies Corporation and a member of the board of Embraer’s Eve Air Mobility, left the company in April.

Members of the Universal Hydrogen strategic advisory board include Tom Enders, a former Airbus CEO and current board member of Lufthansa, Linde and German air taxi developer Lilium; Patrick de Castelbajac, whose previous roles include chief strategist for Airbus, CEO of ATR and CEO of the world’s biggest regional aircraft lessor, Nordic Aviation Capital; Roei Ganzarski, a former CEO of the electric powertrain manufacturer MagniX and executive chairman of Eviation Electric Aircraft; Dr Lourdes Maurice, a former US representative on the ICAO Committee on Aviation Environmental Protection and FAA Chief Scientist for Environment and Energy; and Carl Burleson, a former deputy administrator of the FAA.

Universal’s Mark Cousin was previously SVP Flight Demonstrators for Airbus and technical director of the Beluga XL freighter programme.

But there have been growing doubts about the viability of the Universal Hydrogen business model, as the speed of hydrogen fuelling technologies continues to improve and as airports increasingly look to produce green hydrogen on site or nearby.

As well, the complexity and likely cost of the Universal Hydrogen conversions was coming under scrutiny, as the carriage of hydrogen canisters required a large new compartment in the rear of the aircraft and the addition of a wide cargo door to enable loading and unloading of canisters – a major structural rearrangement not dissimilar to the conversion of former passenger jets into freighters.

Industry insiders said this would not just be an expensive engineering process but also would most likely increase the certification cost and timeline. Reconfiguration would also reduce the number of passenger seats on each aircraft, impacting their expected economics.

There are also increasing concerns across the industry about the high number of sustainable aviation concepts competing for limited investor funds, and growing fears about the future of sustainable aviation incentive programmes and policies in the US. A potential return to power by climate-sceptic Donald Trump in November has led to speculation that current federal incentives under the Inflation Reduction Act to support aviation decarbonisation might be curtailed or even axed.

“Universal Hydrogen needed to be restructured around a new, more viable business model,” said an industry insider familiar with the company’s crisis. “While the technology is sound, the business model is flawed. The company was trying to be too many things – both an aircraft conversion company and a hydrogen company.

“Whereas ZeroAvia will make money on conversions, Universal Hydrogen was going to make the majority of its money on future hydrogen sales, something that investors highly discounted, versus making money on converting the base of around 1,000 ATRs flying today that could be converted.”

However, the official added: “Given how advanced the technology is, it is highly likely that the assets of Universal will be acquired and the conversion process continued to certification, perhaps even streamlined with now the prospect of fixed hydrogen tanks that should speed up the certification process.” 

Jon Gordon, a co-founder of Universal Hydrogen and formerly its General Counsel and Head of Strategic Partnerships and Government Affairs, departed the company several weeks ago to commence a new role as Chief Commercial Officer and General Counsel at Ecolectro, an emerging producer of green hydrogen.

But in a personal post on LinkedIn, he said: “Despite everyone’s best efforts, UH2 proved unable to secure additional funding to move forward. Perhaps we were just too early. Perhaps we couldn’t convince the world that hydrogen, and not just SAF, are necessary for the future of aviation. Time will tell.

“Nonetheless, I’m incredibly proud of what we achieved, and grateful to the hundreds of engineers and investors that supported our efforts. It was nothing short of heroic. We demonstrated the feasibility of hydrogen aviation at a commercially significant scale with 13 successful flights. We obtained Phase 1 certification from the FAA and garnered interest from 17 airlines across 12 countries. We did this together.

“Now it’s up to ZeroAvia and Val Miftakhov (its founder and CEO), Airbus and Glenn Llewellyn (VP Zero Emission Aircraft at Airbus) to bring hydrogen aviation to fruition. You can bet I am cheering them on. Our future may depend on it.”

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