Two hydrogen aviation startups showed divergent outcomes in the past month, one nosediving and the other taking off with an order for 100 hydrogen-electric engines from American Airlines.
In late June, hydrogen-powered flight startup Universal Hydrogen told shareholders the company was liquidating after burning through the US$100 million it raised from investors and failing to acquire additional funds, reports the Seattle Times.
Chair and CEO Mark Cousin told shareholders that Universal Hydrogen was “unable to secure sufficient equity or debt financing to continue operations and similarly… unable to secure an actionable offer for a sale of the business or similar strategic exit transaction.”
But at the same time, another startup developing hydrogen-electric engines for commercial aircraft—ZeroAvia, based out of the U.S. and U.K.—got a promising boost in July with a conditional order for 100 engines for American Airlines, which was also a headline investor in Universal Hydrogen. The order builds off the $30 million in funding ZeroAvia received in 2022 from American Airlines, along with Alaska Airlines and United, says Electrek.
ZeroAvia then received further backing from Japanese based trading company ITOCHU, which has agreed to support the company’s expansion across Asia.
With these advancements coming amidst Universal Hydrogen’s demise, ZeroAvia’s position is now “cemented… as the biggest emergent supplier of hydrogen-electric powertrains to replace fossil-fuelled engines on turboprop planes and regional jets, and later to power new narrowbody aircraft,” reports Green Air News.
Universal Hydrogen had been started by Paul Eremenko, a former chief technology officer at Airbus, and was aiming to retrofit existing planes to be powered by hydrogen. It successfully flew a partially hydrogen-fuelled plane out of Moses Lake in March 2023 and was included in Fast Company’s list of The World’s Most Innovative Companies of 2024.
But the company’s vision posed various technological hurdles, as it aimed not only to engineer a hydrogen-powered propulsion system but to also “create from scratch” a new logistics infrastructure for delivering hydrogen fuel at airports. It had to deal with the reality that hydrogen fuel takes up a lot more space on an airplane than jet fuel, reducing room for passengers. Ensuring that the fuel wasn’t linked to emissions farther up the supply chain also meant Universal needed access to a reliable supply of green hydrogen, produced using renewable energy.
According to Eremenko, private equity firms were also facing higher interest rates and concerns about a looming recession—not to mention the significant risk posed by a Donald Trump presidency in 2025 that would do away with the green hydrogen subsidy available through the Inflation Reduction Act passed under President Joe Biden.
Clean energy analyst Michael Liebreich, however, posted on LinkedIn that Universal Hydrogen’s demise “should be the world’s least surprising news story.” He cited sustainable aviation fuels (SAFs), bioenergy with carbon capture and storage (BECCS), and electrification as more effective alternatives than hydrogen to speed up the response to climate change.
