Why we invested in Universal Hydrogen

Fueling carbon-free flight is one of the top motivations for JetBlue Technology Ventures’ (JTV) sustainable travel investment focus. As travelers ourselves, we want to protect the earth that we love so much.

In 2006, JetBlue was one of the first companies (and first airline!) to report within the Sustainability Accounting Standards Board framework. Since then, the company has been proactive and vocal about dealing with an airline’s largest externality: its carbon emissions, even following through with a commitment to become the first U.S. airline to voluntarily offset domestic flight emissions despite the global pandemic and its financial impact.

Yet a fuel-efficient fleet, streamlined ground operations, and better air traffic management are simply not enough to help JetBlue reach its ambitious goal of net-zero carbon emissions. That’s where we can help: we’re investing in zero-carbon fuels and new propulsion technologies on top of these existing efforts to give JetBlue a seat at the table and pave the way for radical change.

Sustainable travel also happens to be good business, as fuel is one of an airline’s top expenses and customers are demanding more accountability for climate change. Innovations that can make flying more sustainable and, ideally, more profitable, are especially important for the aviation industry. Even during the current pandemic, decarbonization is top of mind for global airlines and will be a major part of the industry’s recovery plan to seize the opportunity to accelerate investment in our zero-carbon future.

This is the driving force behind our latest investment: Universal Hydrogen (UH2), a startup decarbonizing aviation by making hydrogen a viable alternative to traditional jet fuel. As a pioneer in hydrogen containment, distribution, and powertrain technology, UH2 plots a clear trajectory for helping to decarbonize aviation and eventually other forms of transportation like maritime, trucking, and rail.

The hydrogen evolution

Hydrogen has long been heralded as a game-changing technology in transportation that is a decade or more away from widespread adoption. It would make an ideal fuel source for aviation because it emits only water as a byproduct and has roughly three times the energy of jet fuel. Unfortunately, production can be a challenge, considering that the majority of hydrogen is generated using fossil fuels, and, until recently, electrolyzer efficiency availability and costs have been prohibitive.

As such, viable energy inputs have become the key macro issue. But as more regions worldwide invest in renewables, a new landscape is emerging focusing on more affordable energy. Starting in areas with the most robust renewable energy programs like the Pacific Northwest, Canada, Scandinavia, New Zealand, and Australia, it’s looking progressively more feasible that zero-carbon fuels like hydrogen could be produced using only green energy inputs and at competitive prices.

Eventually, experts believe hydrogen can price at — or better than — jet fuel. And this is happening sooner than you might think: UH2 intends to offer long-term hydrogen supply contracts to airlines at cost parity by 2024. That’s partially due to new green hydrogen projects coming online in those aforementioned regions with strong renewable energy infrastructure: more capacity means more availability, which means that offtake agreements can lock in competitive pricing long-term.

From that watershed moment, hydrogen will continue to drop in cost until carbon-based fuels become less appealing, driving further adoption of hydrogen propulsion systems.

Why Universal Hydrogen

Aside from production, the two main hurdles limiting the adoption of hydrogen are distribution and propulsion compatibility. It’s a classic chicken and egg problem: the economics don’t work for fuel distribution if there are no propulsion systems that use hydrogen; and no one will invest in hydrogen propulsion if there’s no reliable fuel network.

UH2 is doing both. First, when it comes to getting hydrogen to airports for distribution, the company is taking a modular approach: transporting hydrogen in aviation-certified capsules over existing intermodal freight networks. This makes it simple for the hydrogen to reach airports, as there’s no significant added costs associated with retrofitting existing networks for alternative fuel.

The company’s hydrogen storage capsules also address inefficiencies and losses that occur in transfer, recompression, and venting that have hindered economic distribution. Modular distribution means their capsules can be transported to airports already full without requiring additional, time-consuming onsite fueling. Once used, empty capsules are shipped back to the company for refilling. These reusable capsules are built for 10,000 cycles, making them durable and long-lasting. And, since the capsules are standardized, they are easily interchangeable and can be deployed globally.

In the fuel business, scale matters. To build a market for green hydrogen and accelerate adoption, UH2 will also develop a conversion kit to retrofit existing regional airplanes with a hydrogen-electric powertrain.

As hydrogen becomes more readily available at airports, airlines will feel more comfortable purchasing planes that run on hydrogen, which will in turn create a market for hydrogen aircraft. It’s a virtuous cycle that builds a market over a long-term horizon, eventually displacing fossil fuels as the predominant fuel for aviation and other transportation industries.

Building the decarbonized future of aviation

It may be somewhat of an understatement to say that we are really excited about UH2’s plan for helping to decarbonize commercial transportation. It is incumbent upon us to build a more sustainable future — and that requires ambitious and bold innovations. We have a ways to go — but investing in companies like UH2 will help us get there.