Listen: Unlocking sustainable flight with hydrogen

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Santiago Canel:

Hello and welcome to the Platts Future Energy Podcast by S&P Global Commodity Insights. Today, we'll be speaking with Arnaud Namer, chief operating officer at Universal Hydrogen about the role that hydrogen fuel, particularly low-carbon hydrogen, will play for decarbonizing the aviation industry. Afterward, I will have a discussion with one of my colleagues to discuss the current state of hydrogen in the transportation sector, including the policies in place and the necessary advancements in pricing and carbon intensity for hydrogen to become a viable option.

I am Santiago Canel, senior market reporter for low-carbon commodity pricing at S&P Global Commodity Insights. Today, I'm talking with Arnaud Namer from Universal Hydrogen. So, for some context, the use of hydrogen fuel in the aviation sector has gotten significant entries as a low-carbon alternative and next-generation fuel. In the private sector, there's many companies actively exploring hydrogen as a solution to decarbonizing the aviation industry, and on the regulatory front, however, the recent signing of the Federal Aviation Administration Reauthorization Act of 2024 by President Biden is expected to provide greater clarity on the potential of hydrogen-powered aircraft and decarbonizing the U.S. aviation industry. This highlights the growing recognition of hydrogen as a promising option for reducing carbon emissions in aviation. Universal Hydrogen achieved a significant milestone in zero-emission aviation by successfully conducting the first-ever 15-minute flight of a hydrogen-powered prototype aircraft in Moses Lake, Washington. Arnaud, thanks for being here. Could you tell me a little bit about Universal Hydrogen and what you guys are doing in the aviation sector?

Arnaud Namer:

Thanks, Santiago. Thanks for having me. Yes. So, as you mentioned, Universal Hydrogen, we are decarbonizing the aviation by moving it to hydrogen power that enables to generate the energy required for aviation with only water as an emission for our aircraft. So, we're doing it by focusing on the largest aircraft that you can do with a fuel cell powertrain. So, fuel cell powertrains means that you're combining the hydrogen and the oxygen from the air into a fuel cell that transforms that into electrical energy, that then feeds the power to an electrical motor. So you're replacing the combustion engine from a jet fuel to, more or less, a hydrogen-electric powertrain. And we're doing that on the largest aircraft. You can do it with a fuel cell powertrain, which is a regional aircraft roughly of 50 to 60 passengers for this first application.

Santiago Canel:

Great. So that leads me to the next question. So there's a report that was published by NASA, where they looked at aircraft and airport domestic greenhouse gas emissions, looking at 2016 to 2021 timeframe. And the report emphasizes that carbon dioxide emissions in the aviation industry vary based on the frequency, distance, and fuel efficiency of flights, spanning from short haul, to medium and long haul flights, with the role of technology and infrastructure also highlighted as a contributor to emissions. That said, you guys are looking at hydrogen fuel cell aviation, not necessarily drop in hydrogen into combustion engines. Where do you see low-carbon hydrogen fuel to play a role in the aviation industry, in terms of across various flight distances?

Arnaud Namer:

Yep. So, we're big believers that you need to use the right energy source and the right technology for the right application. Which means that for very small aircraft, like a four-seater, all of the EV toll, so more or less, the flying taxi that are going to fly 100 miles, battery electric is the solution that's being developed and is probably the right solutions for these applications. Then, from that point to roughly a 2000 nautical mile aircraft for 100 to 200 passengers, hydrogen is the perfect solution, because you can keep an aircraft with the configuration as it is today, which is a tube fuselage and wings, and adapt to the hydrogen power. Beyond that, in order to be able to do very long range transatlantic flights, or an LA to Europe flight, the quantity of hydrogen that you need is actually pretty large, and as hydrogen takes a little bit more space than jet fuel, you would need to change the configuration of the aircraft from a tube and a wing to a flying Delta or a flying wing. So that's pretty far out in terms of development and risk appetite for the aerospace sector.

So, in the meantime, that long range is probably going to be fulfilled by sustainable aviation fuel, and sustainable aviation fuel can be done in different ways, either through bio SAF, so which is cooking oils and doing processing. These type of fats, or e-fuels which start from this same good hydrogen, you try to add on molecules of carbon in order to create a synthetic fuel. So, you have a very large range of these flights, more than 60% of the overall emissions and overall flights that can be done with actually hydrogen in that pretty short timeframe. To give a little bit more information on this, as I was mentioning, we're tackling at Universal Hydrogen, the largest aircraft that you can do today with a fuel cell powertrain, which is, roughly... If you can look also at the Airbus, where Airbus is developing hydrogen aviation also, and the target for fuel cell aircraft to be 100 passenger, 1000 nautical miles. Above that, the weight of the fuel cell powertrain is expected to be a little bit too heavy with the current technologies, and you'd have to go through hydrogen combustion.

So modifying existing aircraft engine to be able to combust the hydrogen, you still have no carbon emissions, because there's no carbon in the fuel. And that enables to reach, I'd say, the 200 passengers, 2000 nautical miles, but you need a little bit of a wider ecosystem, because you need really engine manufacturers and the aircraft manufacturers to work together to be able to design and manufacture such aircraft.

Santiago Canel:

Understood. So development in the technology is still needed. Now, it's also supportive to hear that hydrogen will play in the aviation sector, at least in the longer term. I know that the Fit for 55 package in the European Union, which was put into law, written the refuel EU aviation rules, states that starting from 2025 airports and fuel suppliers will have to start... At least 2% of aviation fuel will have to be green, with this share increasing every five years, up to 70% in 2050. And similar to what you said, and the short-term sustainable aviation fuel is anticipated to be the dominant low-carbon fuel, contributing to the share, right, for domestic and international flights into the EU.

Now, there are some challenges which you've mentioned about the technology not being there for hydrogen fuel cells and hydrogen combustion aviation. Now, the other barriers that we've seen in the market is the availability and the cost parity of hydrogen. And I want to ask, how is universal hydrogen addressing the issue of limited hydrogen availability at airports, the safety aspects, and the complexities of transporting hydrogen?

Arnaud Namer:

So, just a first element on the technology before that. So, the technology for the fuel cell powertrains that we're doing today is existing as mainly derived from the automobile industry, for which it's demonstrated reliability and safety on the road with, for example, the Toyota Mirai that is widely distributed and running in California. So the technology has been adapted for the aviation sector for the fuel cell powertrain, but is mainly existing. The next steps in order to get into service is the regulatory aspects, is to get the approval from the FAA and the certification.

So, for this fuel cell powertrain, the objective is for us to be in service in 2027, which is a very short timeframe. And, I'd be glad to be flying in that hydrogen aircraft as soon as we enter into service. In terms of availability of hydrogen, thanks to the initiatives which are in Europe and in the U.S., and the U.S. with the Inflation Reduction Act and the production tax credits up to $3 per kilo of hydrogen, there's a large amount of projects that are in the pipeline and that enter into service and plant service in the 2026, '27 timeframe.

So I think the availability of hydrogen is really starting to not be a major issue if these projects go through. And for these projects to go through, what we need today is these regulations to freeze, like in the U.S., the IRAPTC has still some open points in terms of guidance and in terms of rules, these need to be frozen, so the producers and the project developers can have a guarantee on the return on investment of their large projects. And therefore, provide the availability in that 2027. And as these projects are large 100 megawatt, multi 100 megawatt projects, they benefit from the reduction of cost due to the scale of these projects.

You mentioned the parity to jet fuel. I think that's an important point. The unit economics need to work for an airline to be able to enter into service with a hydrogen aircraft. And, this is where a little bit, there's the beauty of the fuel cell powertrain, because not only meets the performance requirements of the aircraft, but it also is significantly beneficial for the unit economics, a fuel cell powertrain that has a much higher efficiency, and therefore consumes less hydrogen, than compared to a jet fuel. So you get some benefits of needing less energy to be able to move your aircraft from point A to point B. The second point is that it's an electric aircraft, and therefore it has less maintenance cost associated to it. So when you put all of these pieces together in terms of hydrogen availability, in terms of maintenance cost, and in terms of efficiency of the powertrain, we foresee that we have this parity of unit economics for the airlines in that 2027, 2028 timeframe.

Santiago Canel:

Diving further into the cost parity with diesel, I know you guys are really trying to drive the cost in terms of efficiency and your technology, but the chemical composition of hydrogen and the challenge of transporting is still there. Could you expand on what you guys are doing at Universal Hydrogen to basically lower the cost of transportation? And I'll just give some context. If we compare with the transport sector, there's a lot of progress in hydrogen in the transit and in the heavy duty trucking, at least in California. And a big percentage of your cost is in your transportation of the fuel. So, could you expand on what Universal Hydrogen is doing on this front or the aviation sector as a whole?

Arnaud Namer:

Yes. For the aviation sector, one of the biggest barriers to enter is the infrastructure. Will the airports have the infrastructure to be able to have hydrogen? So, at Universal Hydrogen, we're known as the Nespresso of the hydrogen industry, because we actually go completely around this infrastructure problem and solve it by putting the hydrogen in modules, in capsules, at the source of production of that hydrogen, and transporting these modules on existing intermodal freight network, delivering these modules on the airports, and using existing then cargo equipment to be able to handle these modules on the airport, load them onto the aircraft, connect them to the aircraft, and do the mission of the aircraft.

So, if you were to think of fueling hydrogen on airports using the classical jet fuel thought process, you'd require trillions of dollars of investment simultaneously on all of the airports for an airline to be able to operate on a network. Thanks to our modular distribution system, you completely avoid all of that capital expenses and infrastructure expenses on all of the airport. And, because you're able to deliver all of these modules to the different airports without any infrastructure, which means that the airports are immediately hydrogen ready and it's only a question of local authority approvals in terms of procedures and working hand-in-hand with the airports to be able to deploy this hydrogen to the airports.

Santiago Canel:

Is there any insight that you can provide on what you would like to see in the Hydrogen Aviation Strategy Act?

Arnaud Namer:

Well, I think, what we need to push now, the technology is available, we've been flying the aircraft, so a Dash 8 Q 300 for over a year now. Technology has proven to be very robust. And so, we're working hand-in-hand with the FAA in order to prepare the certification of the aircraft. So I think, from a technology, a product and a ground logistics and infrastructure, we have the solutions that are in place. What we need now is to push the utilization and to force the compliance to zero emission of the industry.

Today, there's a significantly different level of emission reduction if you consider the mandates that are on sustainable aviation fuel, versus flying on clean hydrogen. If you fly on clean hydrogen, which is possible from 2027 onwards, with passenger flights, you have truly zero emission. And that should be the push of the regulatory bodies and of the governments to be able to move quickly to zero emission as the technology and infrastructure is going to be there. On the sustainable aviation fuel, what we see is the regulation is pushing to blend sustainable aviation fuel at 0, 5%, 1%, gradually in the jet fuel. Although it's beneficial, it provides very limited impact on the emissions when you blend at that rate, and we can go much faster with the technology that is available today.

Santiago Canel:

Understood. So, of course, with the US DOE hubs, the hydrogen hubs developing, and as large-scale production facilities across these hubs start to pump out green molecules for the aviation to use. What are you guys, besides the availability of green molecules, the policy side, what other barriers are you guys seeing to be holding you guys back from flying from LA to Europe per se?

Arnaud Namer:

So, our aircraft is able to do regional flights, which means, it's a network in California, it's a network in the U.S. Northeast, so it's a 500 nautical mile. For that to happen, the major barrier to start passenger operations is the certification of the retrofit of the aircraft. So, there's three steps to that. The first one is to agree with the FAA on the requirements required to be able to certify the aircraft. And that one, we have passed with the FAA. We've been working with the FAA for several years now, and successfully passed this one.

The second one is to then show how we are going to demonstrate compliance to the requirements, and this is what we're discussing right now with the FAA. And the third one is to actually demonstrate the compliance to the requirements through flight test and other means, and that will happen in the 2026 timeframe. I think, today, what's the major next hurdles to pass are these ones, because we have to continue to demonstrate... Aviation has always been a safety first environment with very, very strict safety regulations and requirements. We need to continue to enforce that safety mindset and to demonstrate that the hydrogen for fuel as aviation is as safe or better than actually jet fuel.

Santiago Canel:

Great. So, modular approach, regional flights in the short-term and green hydrogen production. Is there anything that I missed from that explanation that you would like to say?

Arnaud Namer:

No, I think that's pretty accurate. And, all I can say is that, today the technology is there. It's only a question of will, power, and finance, and funding to be able to get to the finish line. And we're very excited to get there in the next couple of years, which is pretty incredible to be able to transform an industry, such as aviation, in such a short timeframe.

Santiago Canel:

Now, here's my conversation with Daniel Weeks who covers energy transition news at Commodity Insights. So from the conversation with Arnaud, he stated that one of the barriers to the implementation of hydrogen fuel cell power train technology and aviation by 2027 is the regulatory approval and certification process that is required by the FAA. This approval is necessary to ensure the safety and compliance of the technology before it can be used in commercial aviation. Daniel, can you give me some color on what the FAA Reauthorization Act of 2024 means for hydrogen's role in the aviation sector?

Daniel Weeks:

So, the text of the Reauthorization Act, it states, it looks to spur innovation and technology adoption broadly. It directs the FAA to work on certifying a hydrogen-powered commercial aircraft, via hydrogen fuel cells, hydrogen combustion engines or propulsion systems, or using it as an input for conventional jet fuel. That's a wide approach. The bill also adds hydrogen refueling infrastructure to be considered for funding under the airport improvement program. It directs the secretary of energy to review grant and loan eligibility requirements to direct some funding towards enabling the use of hydrogen and commercial aircraft. And energy leaders were also directed to work with the aviation supply and aerospace industries, as well as hydrogen producers to obtain input on the best possible regulatory framework to enable hydrogen-powered aircraft in the U.S.

So overall, it remains to be seen. But, it seems like the administration will soon be working with industry members in the near future to find the best path to implementing hydrogen in the space. But that does come with questions about the state of hydrogen as a transportation fuel in the U.S. overall. So, Santiago, from your perspective, what would you say is the current state of low-carbon hydrogen availability and its role in specifically heavy-duty transportation in the U.S.?

Santiago Canel:

Beyond the traditional uses of hydrogen in the chemical sector, the hydrogen market, it's in its early stages. But, beyond the IRA 45V hydrogen production tax credits and the establishments of U.S. DOE hydrogen hubs, it's a waiting game at the moment to see how production of low-carbon hydrogen develops in these markets. Now, California is leading the way in hydrogen proliferation with subsidies and low-carbon targets in the transportation sector, including the marine, the mobility, both for light-duty vehicles and heavy-duty vehicles like transit and trucking, rail, and lastly aviation. Which are all similar to the available technologies in the aviation sector.

Now, there are some challenges. California has been experiencing where certain applications like the light-duty vehicle sector saw record high pricing of $33 a kilogram, which was the last price that Platts assessed, supply disruptions, issues with station availability and reliability, and many others. Now, for the heavy-duty transport in California, there's promising results from that. It has some advantages over light-duty vehicles, in terms of hydrogen application, based on the sourcing of the fuel being on-site, predictability, and demand, and ultimately, the fuel price that is relatively cost-competitive with the incumbent fuel. So in terms of the availability of the fuel, it goes back to Arnaud's comment and our discussion, the predictability of the demand that is required in these end-use sectors varies based on how much hydrogen is needed. And, there's certain applications like heavy-duty trucking, where you know the demand and therefore there is availability of that fuel.

Daniel Weeks:

I was particularly interested in the fact that the two of you discussed that the technology is there and that there are regulatory barriers, but there is also that existing problem of the cost difference between hydrogen and incumbent fuels. Arnaud highlighted that there's a pipeline of projects that are coming in the U.S. that are likely to increase the supply and address cost problems. But besides scale, what are some ways that hydrogen costs can be brought down to be more competitive with incumbent fuels?

Santiago Canel:

Yeah, we're certainly seeing that across different end-use sectors. Perhaps an example is the light-duty sector in California, where they're seeing extremely high pricing in consumer pricing at the pump of $33 a kilogram, compared to the heavy-duty transport where prices are more than $9 to $15 a kilogram, which are competitive to diesel per se. Now, the differences is the processes of where the fuel is produced and where it's consumed, and other issues having to do with the reliability of the stations, the cost of transporting the hydrogen. So therefore, and this is coming from the market, if markets like the aviation industry are going to adopt hydrogen as low-carbon fuel, they're going to have to learn from these processes from the midstream steps to get a hydrogen price that is competitive, that is safe, that is reliable, doesn't face all these reliability issues that we're seeing in the light-duty vehicle sector.

Daniel Weeks:

Following up on that Santiago, so how long can the industry afford to work with these elevated prices? I mean, like you mentioned in your conversation the technology is there, and what they're waiting on is policy to essentially catch up.

Santiago Canel:

Well, yeah, that's what we heard from Arnaud, at least in the conversation, where he stated that the aviation sector is waiting for certification from the FAA. Basically saying that the technology's ready, they're ready for 2027, or at least they have that target rate, and they want the regulatory support. Now, from the pricing angle and the availability of the fuel, our elevated price is going to stay forever. The aviation industry, like all these end-use sectors have 5 to 10 years of development, compared to other commodities where they've already overcome the cost curve, the learning curve. And currently, right now, the aviation sector as well as other applications for hydrogen are just overcoming those barriers. As we're seeing right now with the policy side, that's just being announced. And, we're hearing from the technology experts saying that they're waiting for approval from policy from the FAA, which therefore means that the technology according to them is ready.

Daniel Weeks:

Right. So, the market is still very much in a wait-and-see period here with 45V. At the last conference that I attended, you were there too, the World Hydrogen Conference, speakers said that this wait-and-see period as we wait for these final rules to develop, members of the industry, they said that that was potentially slowing the development of the hydrogen industry. Some even went as far as to say that it's stopping it in its infancy.

While environmental advocates, they say that the rules need to be strict, because hydrogen itself is a greenhouse gas, and the stricter the rules are then the more environmentally friendly that the resulting projects will be. And that's basically where the conversation left off after the public comment period earlier this year. There's a variety of criticisms being thrown at 45V at the moment. But, we're still very much in a wait-and-see period. The final draft could be released this summer. But it's currently unclear. So, what does the process look like for hydrogen adoption in heavy-duty transport, transit, trucking, and also aviation?

Santiago Canel:

If we recall the conversation with Arnaud, he mentioned that the fuel cell technology being used in the aviation sector has been adapted from the mobility sector. Now, the adoption of hydrogen fuel and the heavy-duty transport sector shares a lot of similarities with the aviation sector, in terms of the hydrogen volume required and the pricing predictability based on the flight patterns and the number of airplanes required, as well as the proximity of the production to the consumption to minimize any cost associated with transportation.

So, in that conversation with Arnaud, the technology is available, and per our insights, the pricing of hydrogen in California for heavy transport with similar volumes as the aviation sector ranges from 9 to $15 a kilogram for both domestic and out-of-state production. However, even though hydrogen fuel in airplanes does not produce carbon emissions, according to the chat with Arnaud, the challenge lies in ensuring that the hydrogen fuel is low-carbon, as currently, the hydrogen in California is only mandated to be partly low-carbon, based if it receives any state funding. So, as the hydrogen production tax credits and the Department of Energy hubs come to fruition, the market at least expects more production in the market and also greener molecules to come online. I think that's all the time we had today. But thanks again to Arnaud and Daniel for being part of this episode. And thanks to the listeners for tuning in. I encourage you all to check out our hydrogen content on Platts Connect to learn more about the status of the hydrogen market. This Future Energy episode was produced by Jennifer Pedrick in Houston.