Startup Series: Universal Hydrogen
Today's guest is Paul Eremenko, Co-Founder and CEO of Universal Hydrogen.
Before Universal Hydrogen, Paul served as Senior Vice President and CTO of United Technologies and CTO of Airbus. When he co-founded Universal Hydrogen, Paul felt hydrogen was the only solution the industry has to meet the Paris Agreement's goals and decarbonize.
Universal Hydrogen is an end-to-end fuel logistics company making hydrogen-powered commercial flight a near-term reality. The aerospace and aviation industry is decarbonizing too slowly to meet the Paris Agreement objectives. Paul and his team are tackling two of the biggest challenges in hydrogen flight: creating a distribution infrastructure and kick-starting demand for hydrogen. To distribute hydrogen, Universal Hydrogen is rethinking how we can transport it. The company specially designs lightweight aviation-certified hydrogen capsules that are compatible with the existing infrastructure and freight networks. Universal Hydrogen is retrofitting regional airplanes with conversion kits necessary to utilize hydrogen as fuel. It is building a roadmap for other aircraft companies to adopt these designs. Universal Hydrogen partners with many companies, from freight logistics to fuel cell development to aircraft makers and modifiers. Backed by Trucks, Jeff Schox, Reilly Brennan, Plug Power, and smaller investors, Universal Hydrogen is paving the way for zero-emission aviation.
Pauls walks me through how he transitioned to working in green hydrogen and the gaps that Universal Hydrogen is filling within the aviation industry. Paul explains why hydrogen is the best fuel for zero-emission flight, the barriers to hydrogen adoption, and key startups Universal Hydrogen partners with. Paul and I also discuss the stakeholders, funding to date, and the future of the company. This episode is a must-listen for anyone interested in decarbonization aviation.
Enjoy the show!
You can find me on Twitter @jjacobs22 or @mcjpod and email at info@myclimatejourney.co, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded February 4th, 2021.
In Today's episode, we cover:
What led Paul to co-found Universal Hydrogen
Universal Hydrogen's mission, how to company started, and what they focus on
What makes it so hard to decarbonize the aviation industry
The current climate solutions available in aviation
The problems with Sustainable Aviation Fuels and batteries
The difference between green hydrogen and hydrogen
Main barrier to the cost of transporting hydrogen
Key buckets for stakeholders and key partners they work with
Where Universal Hydrogen is at Today and the progress to date
Areas that Paul is excited about
Most significant risks Universal Hydrogen is taking
The stage Universal Hydrogen is at and how they are preparing to bring their product to market
Funding to date and investors for the company
The future of Universal Hydrogen
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Hello, everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help.
Today's guest is Paul Eremenko, co-founder and CEO of Universal Hydrogen. Universal Hydrogen is a fuel logistics company making hydrogen-powered commercial flight a near-term reality. They want to do this by enabling zero emissions commercial aviation and tackling the two biggest challenges, creating a distribution infrastructure and kick-starting demand for hydrogen.
Now, Paul has an interesting background, given that he most recently was the senior vice president and CTO of United Technologies and, prior to that, was the CTO of Airbus. We have a great discussion in this episode about the future of aviation, what makes it so difficult to decarbonize, the different approaches to decarbonization, some of the pros and cons of the hydrogen-powered approach, where it is in its deployment, what some of the barriers are that's holding it back, which ones Universal Hydrogen is aiming to address and how, how they're looking to stage it and capitalize the company, and we also talk about what else is needed in order to make a hydrogen-powered aviation industry a reality.
Paul, welcome to the show.
Paul Eremenko: Thanks, Jason. Happy to be here.
Jason Jacobs: Psyched to have you. And this is a milestone from an MCJ standpoint in that, historically, we have done these startup series episodes with video and slides, but barely anyone was, was watching the video, 'cause they apparently liked to listen to MCJ when they're out doing stuff. And then when they're out doing stuff and we've published just the audio of walking through the slides, they said, "Well, you're talking about stuff I can't see."
So we're going to try just doing the audio and no slides for the startup series. And this is episode number one of that. So you're the Guinea pig.
Paul Eremenko: Sounds good. I'll try to be as vivid and descriptive as I can be, and most of the stuff that we're doing is out there in the public so people can just Google me or Universal Hydrogen if they want to see visuals to accompany the, the voice track.
Jason Jacobs: Well, you must be an entrepreneur, because you are unfazed. I, I feel like I could have thrown a lot worse at you, and, and it wouldn't have fazed you.
Paul Eremenko: Well, if you said slides only and no audio, it would have been maybe more of a problem. But-
Jason Jacobs: [Laughs].
Paul Eremenko: This is good. This is all good.
Jason Jacobs: So what's Universal Hydrogen? We can just get right into it.
Paul Eremenko: Yeah, sure. So look, uh, we are on a mission to, to decarbonize aviation and to do it in the near term. I have been frustrated for a number of years that I've been in the industry with the failure of the industry to have any sort of roadmap or plan to meet Paris Agreement objectives. And I think that represents about as near a global consensus as we have as a society about where we need to go from an emissions and decarbonization perspective, and I find it very frustrating, honestly, that an industry that's supposed to be at the bleeding edge of innovation is actually probably the biggest sector that doesn't have a credible roadmap for getting there.
And so I think that's demoralizing for young people going into the industry, and I think in the long term it's ... or even not in the long term, maybe [laughs], in the, in the middle and near term, it's just bad business. It's bad for the industry. And we want people like Greta Thunberg to be aspiring aerospace engineers rather than protesting the industry out on the streets.
And so Universal Hydrogen is really about trying to take a more disruptive approach than what I could do from the inside. As you know, I, you know, I spent a number of years inside companies like Airbus and, and United Technologies trying to make the incrementalist mindset a little bit less incrementalist, make the increments a little bit bigger. But I have come to the realization that getting the industry to move requires a, an external disruptive force, and that's the way to, to get everyone to pay attention.
And so Universal Hydrogen's about completing the hydrogen value chain for the aviation vertical. But we identify two key gaps, and we're filling those gaps ourselves and everywhere else we're partnering very aggressively to string together the hydrogen value chain so that it can work and it can work in the next couple years, not in the next couple decades.
Jason Jacobs: So before we jump too far into that, and there's a lot to talk about there, can you talk a bit about what makes aviation so hard to decarbonize and then what some of the potential solution paths are that are on the table and being debated and being worked on in terms of how we ultimately get there?
Paul Eremenko: Aviation is difficult because it's so weight sensitive. In fact, it's probably the most weight sensitive application out there. And so as a result, the range of solutions, the range of possible energy storage solutions for aviation is quite limited.
I think there's only really three viable ones that are scalable in any meaningful sense of the word scalable. One's batteries, right? And that's been talked about a lot, and I think a guest that you had on Jeff Engler, who also happens to be a friend of mine-
Jason Jacobs: Yeah.
Paul Eremenko: ... talked quite a bit about batteries for aviation. But there's a limit, at least with existing battery technologies, as to how far it can scale. So today, you could do a couple passengers, you know, maybe one to four passengers for less than 100 kilometers, right? And that's, that's as far as lithium ion batteries will take you. You know, maybe they'll get better over time and maybe they'll scale up to, to t-, you know, a 10-passenger and 100 kilometer scale, but they're not going to, barring a disruptive change in the chemistry, in the electric chemistry of batteries. L-, lithium ion's not going to get you commercial aviation at scale.
Another solution that's out there is ... and the category is called SAFs, right? Sustainable aviation fuels, which include biofuels as well as synthetic hydrocarbons. And the idea there, of course, is, is you're still burning a hydrocarbon at 35,000 feet and you're still emitting CO2 and nitrous oxides and soot and aerosols and all of these other things that have global warming impact, and you're doing it at 35,000 feet so the global warming impact is actually higher at altitude. And the idea is that you then offset that by sequestering carbon dioxide or carbon directly in the production process, whether it's algae sucking it from the atmosphere or some other sequestration process. So it's an offset scheme basically.
And the question is how efficient is that offset scheme and how expensive is it to get that offset scheme to actually be 100% offset, so net zero. And, and the answer is that we're pretty far from being net zero if you really properly account for not just CO2, but all of emissions and the fact that they happen at altitude. Today, you also have to blend synthetic fuels or biofuels with conventional, you know, dinosaur-based fuels. For the aircraft, that blending requirement might go away, but the bottom line is they're expensive and they're an offset scheme.
And then the third family of solution ... But they have a place, I sh-, I should say. We can come back to where their, I think, rightful place in aviation is.
And then the third family of solutions is around hydrogen, and hydrogen has many positives and some negatives. The positives are that it's truly clean, right? So the product of hydrogen is water, right, when you extract electricity from it. It is also extremely efficient energy carrier. It is the most efficient energy carrier on a per unit weight basis of any non-nuclear fuel out there. So it's about three to four times more energy dense, gravimetrically energy dense than jet fuel.
And it's actually safe, contrary to some public perception of hydrogen. The physics are very much on the side of hydrogen versus kerosene in terms of safety. And so the fundamentals are great. The challenge with hydrogen is, is the volume. And for very, very long range applications, so, you know, global range type flight routes, it creates a volume problem for where do you store the hydrogen and how do you get it in the fuselage and is going to require radically different aircraft configurations in order to get the volumetric storage to work.
And so those probably won't materialize until further out. And so for these very long routes, synthetic SAFs are probably the, the near term solution.
And that's kind of it, right? Those are the three families that are out there. And our goal with Universal Hydrogen is to take a lot of the excuses for making hydrogen viable among those three families off the table. And hydrogen closes for the small stuff, for the urban air mobility, kind of cross-city applications, and, and is much better batteries. Actually, in concert with batteries is the optimum there. For regional, it's a no-brainer. It solves the regional problem.
And for single aisle, right? Single aisle is the A320 Boeing 737 kind of family aircraft, where the longest route would be JFK to Heathrow, and you can do that on hydrogen without loss of passengers, without compromising aircraft performance. And that's the sector that flies most of the passenger miles in the world. So that's what we're trying to make happen, is this large swatch of aviation to actually move it to truly carbon-free and do so in the next five to 10 years.
Jason Jacobs: So is there any world where that second bucket is anything more than just a bandaid? Like, is there any world where that is a long-term durable solution?
Paul Eremenko: The second bucket being SAFs, yeah?
Jason Jacobs: Yeah.
Paul Eremenko: Synthetic, sustainable fuels? So the question is for the very long range routes, and again, this is would be like an A350 Boeing 787, the question is whether the industry will move to a different aircraft configuration, as they would need it, when it's time to retire and replace the 350 and the 787. Those are newer aircraft than the 320 and the 737, so that replacement probably won't happen, at least naturally, until the 2040s. And by the 2040s, a lot can change, right? So it's hard to predict the future that far out. But you would need to move to like a blended wing body type configuration instead of a tube, a tube and wings configuration that we're used to today.
If the industry can move to a blended wing body or some other volumetrically more efficient configuration, then hydrogen could take that segment, and then SAFs are out probably by 2050. If the m-, industry doesn't move, then SAFs will be there in perpetuity as the long range solution. But the bulk of passenger miles in single aisle and s-, anything smaller would be flown on hydrogen.
Jason Jacobs: And is there no world where electric can get there?
Paul Eremenko: Well, I should say that electric ... So you mean batteries, right?
Jason Jacobs: Yeah. Yeah.
Paul Eremenko: Because I think a lot of the hydrogen solutions with a fuel cell, for instance, are electric. It's just that the electric storage is in hydrogen rather than in batteries. I wouldn't say no world. I will say that lithium ion batteries won't get there. There are other battery chemistries, right?
Lithium air has been a technology, which is kind of like partially a fuel cell. So you take ambient air as an input, but no hydrogen. Lithium air is a technology that's been talked about, and they have theoretical efficiencies. The actual demonstrated efficiencies of those batteries, and by efficiency, I mean energy storage efficiency, are quite low. And if that technology takes a similar trajectory to lithium ion, so lithium ion took about 30 years to get from lab bench to an airplane, to flying airplanes. And so, okay, well, you know, we're marching towards the singularity. Everything is exponential. So next one's going to be faster. But it's still going to be a decade or more.
And so fuel cells are much more mature technology that's been maturing alongside lithium ion, frankly, and has kind of come into its own. So I think that's the more likely thing. But in the, in the much longer term, 10, 20 years out, sure, could another battery electrochemistry emerge? It could. It could. It's just not clear what that is today, and it will take some time to develop and mature.
Jason Jacobs: Okay. So coming back around now to hydrogen and making it a reality, it sounds like that's what your focused on with Universal Hydrogen, in that the primary issue is an issue of volume, I think you said, and that there's a couple pieces of the process that you are taking on with Universal Hydrogen and you will partner for the rest.
First of all, it would be good to just double check that I didn't misspeak anywhere in there. And then second of all, it would be great to understand what are the key pieces of that process, and then which of the ones specifically that you're taking on with Universal Hydrogen.
Paul Eremenko: So first of all, hydrogen aviation is not a new idea. The first hydrogen airplane, manned or crewed airplane flew in the 1950s. The Soviets flew a hydrogen air, powered airliner the Tupolev Tu-155 the 1980s. So the idea is not new.
What is new is the fact that green hydrogen is becoming increasingly affordable and seems to be following kind of a Moore's law-like trajectory in its, in its cost. And volume is the flip side of that, right? So cost and volume, and they're closely related, of course.
So we estimate, and this is, this is based on public industry data. We have our own models, but more importantly, we have future priced offtake agreements with key partners that confirm that we can deliver green hydrogen by the mid 2020s, so like 2025, at a price point that's comparable to jet fuel, right?
So the production piece, we think, is pretty much taken care of, meaning that the hydrogen will be there, it will be green, and it will be on par and eventually much, much cheaper than jet fuel.
Jason Jacobs: And the distinction between green hydrogen and hydrogen is what?
Paul Eremenko: So green hydrogen is hydrogen that uses no carbon in the production footprint, right?
Jason Jacobs: Okay.
Paul Eremenko: So there's a few different ways of producing hydrogen. And green is usually electrolysis, which is basically a fuel cell running in reverse. So you take water and electricity as an input. The electricity in that case has to be renewable, right? So carbon-free to make it green hydrogen. And with water and electricity, you break down the water into hydrogen and oxygen, and then you capture the hydrogen as a fuel. And then the fuel cell does the reverse of that, right? Take hydrogen and ambient air and produce water as the emission, as the emittant, and electricity to power the aircraft.
So the green hydrogen production piece is taken care of. What is a challenge, though, is getting the hydrogen from the point of production to the point of consumption, basically to the aircraft. And conventionally, you would do that either by running a pipeline or by building a fleet of tanker truckers, a storage reservoir at the airport, and then a fleet of hydrogen fuel trucks at the airport.
And if you add all of that up across the footprint of a typical regional airline, it becomes a very capital expensive proposition and creates a, a significant barrier to entry and to, barrier to adoption.
Jason Jacobs: And that's each of those, the trucks and the pipeline option? Or, like, those are two separate and distinct options, right?
Paul Eremenko: Yeah. They're separate and distinct. The pipeline, I think it's obvious why, why it's very capital intensive. You might do it for the larger airports, right? And that may happen over time. And our model, our business model is robust to these other approaches emerging.
The key insight that we have is, "Hey, let's make hydrogen compatible with the exist freight network." So we put hydrogen in capsules. These are specially designed capsules that are very lightweight and they're aviation certified. So ultimately, that capsule ends up in the aircraft as the primary fuel tank. After the flight's done, we remove the empty capsule.
But the beauty of it is we can put these in shipping containers. They go on trucks, they go on trains, they go on ships. This is the existing freight network that delivers our Amazon packages. It is the most efficient way that we as a civilization have of moving stuff around the earth. It's very cost effective and it's ubiquitous.
And then when this stuff gets to the airport, when the hydrogen modules get to the airport, you don't need any new infrastructure at the airport. You use the existing cargo handling equipment, right? So down a forklift at some of the smaller, less improved airports. And you load the stuff into the aircraft using existing cargo handling equipment.
And so it is a ... we call it, you know, zero infrastructure for zero emissions. There's no capex barrier to entry and there's no barrier to adoption, basically. And so that's ... So we're solving that piece. Over time, as I said, you'll get pipelines. You may get some more localized production, right? The number of production sites will increase. But it still makes sense to use a modular solution, even if you're just moving that hydrogen from one end of the airport to the other end of the airport, because every time you move hydrogen from one vessel to another vessel, you have losses. And never mind the fact that those vessels, if they're, they have to be custom built, add up to a rather expensive infrastructure tab.
So even where production becomes increasingly localized, we think this modular capsule solution still makes sense. What we did have to invent, though, is for these capsules to be very weight efficient. So they're about twice as good in terms of weight efficiency than a standard composite pressure tank that you might buy. And then the other thing is they need to be FAA certified, and that's a really high bar, a high safety bar, and we should all be grateful for that. And so we've designed these from the ground up to be designed for aviation safety and aviation certification.
Jason Jacobs: So it sounds like one of the things that you're taking on is these capsules. What is the second thing?
Paul Eremenko: Yeah. The second thing is ... And you know, I like to analogize the capsules to the Nespresso coffee capsule. I don't know if you're ... if you, Jason, are a big coffee drinker.
Jason Jacobs: Oh yeah. Uh, too much. And I, I know Nespresso well.
Paul Eremenko: Well, there you go. So we don't go to the coffee, right? We package the coffee in the capsules. But you got to have a coffee maker. Somebody's got to build the first coffee maker, or your capsules are useless.
And then ideally, you don't stay in the coffee maker business. You have other people who build coffee makers compatible with your capsule technology. And that's exactly our strategy. So our first coffee maker is a conversion kit. It's a retrofit conversion kit for regional airplanes that allows them during a, a standard engine overhaul event to replace the turbo prop engine with a fuel cell. And there's a few other s-, relatively minor structural modifications to make the aircraft compatible with the capsules.
And so that's our first coffee maker. Our goal is not to get into the aircraft business. We want other people to build hydrogen aircraft and obviously to take advantage of our fuel distribution network and our, and our capsule technology. But we want to build the first one, both as a reference design for others and also to pave the way from a certification perspective. So one of the big challenges is negotiating the certification bases, is how do you certify hydrogen powertrains with the regulators like the FAA and EASA.
And so I think we would be the first to do that for a large commercial aircraft, and that will pave the way for others to get into the space, uh, much more easily with much faster development timelines and certification timelines.
Jason Jacobs: So you've got the capsules, you've got the conversion kit, and then you said you would partner for the rest. What's the rest? What are the key other buckets and stakeholders that need to come to the table here?
Paul Eremenko: So there's kind of two value chains here. There is the hydrogen value chain, and then there's the hydrogen airplane value chain. So in the hydrogen value chain, we talked about production and we have offtake partners. Again, given the fact that we're entering the regional market, our customers of regional airlines, they're typically confined to a geography. And so we need to look for offtake opportunities around the world to serve our launch partners or our launch customers on the airline front.
And then, of course, we have to partner with the freight logistics companies to do the freight forwarding of our containerized capsules. And then at the airport, some airlines s-, have their own personnel who do the refueling operation. In this case, of course, it's more like cargo handling, but it's still a fueling operation. Others rely on partners. And so we would need to bring to bear, you know, on airport service personnel who are trained to handle hydrogen. That's the hydrogen value chain.
Of course, then the airline customers, the operator customers, and not just airline, passenger airlines, but also cargo carriers.
And then on the hydrogen aircraft value chain, there is a couple of key partnerships so we don't build our own fuel cells. We partner with Plug Power on the fuel cell front, and they are light weighting their latest line of pro-gen fuel cells, specifically for the aviation application. And, and we're taking it through the certification process. So we have a great partnership with them.
We also partner with a company called MagniX, which is a startup, but it's a pretty mature startup, on the electric motors and aviation-certified electric motors. And then, of course, we partner with the the aircraft OEMs, the aircraft makers, and companies that specialize in aircraft mods to actually build this modification conversion kit and get it certified under a process that the regulators call an STC, supplemental type certificate, rather than a new type certificate. And so it's a much faster process, again, to get to market as quickly as we can with something that carries passengers on hydrogen.
So those are the key partners on ... And of course, again, the endpoint of that value chain is still the airliner cargo carrier.
Jason Jacobs: And if Universal Hydrogen didn't exist, what path would hydrogen aviation be on in terms of some of the leading contenders for approach, and how far along are those approaches? And then I'll ask you the same question in terms of where you're at today with Universal Hydrogen and your progress to date.
Paul Eremenko: I think the industry would eventually converge on hydrogen whether we existed or not. I just think it would take a lot longer. We've seen Airbus take a pretty public stance o-, over the course of the past year. I think their COVID bailout package from the French government was very heavily conditioned on taking zero, truly zero emissions very seriously. And so they've been quite public about putting out concept aircraft, right, and talking about that the next single aisle, right, the A320 successor in the early to mid 2030s could very well be a hydrogen aircraft.
So we think that we ... And you know, Boeing hasn't said anything publicly on this front. But I should point out that Boeing did the first manned fuel cell demonstrator in 2008. So they clearly have the capability, the expertise, and the, the knowledge within their organization.
And so I think what we are trying to do is we're trying to de-risk the decision as Boeing and Airbus think about their new single aisle aircraft. You know, they'll have to make a launch decision is 2027, 2028 kind of timeframe for an early 2030s or mid 2030s entry into service. And we want to be operating at the regional scale, globally delivering hydrogen, providing good quality of service, providing green hydrogen at a really affordable price to de-risk the decision for them to go with hydrogen.
So we see ourselves as a catalyst. Hydrogen, I think, stands on its own merits. Universal Hydrogen doesn't have to be there for the industry to eventually converge, but we think we can make the industry get there a decade or so faster, which makes a huge difference from a Paris Agreement perspective, right? Because we have to remember Paris Agreement is not just a 2050 net zero goal, but it's a trajectory. It's the 1.5 degree global warming scenario that has 2030 goals and 2035 goals and 2040 goals. So we got to move now or we're not going to get on that trajectory.
Jason Jacobs: So if hydrogen were going to happen anyways, but would just take a lot longer, and Universal Hydrogen didn't exist, how would the volume and the transport problem be solved? What are the most likely contenders in a non ... you know, in a world where Universal Hydrogen doesn't exist? And also, is this capsule approach brand new? Are you the first ones to think about it, or, or is this kind of a build on, on other things that have been tried?
Paul Eremenko: The alternatives, uh, as we discussed briefly, are building a pipeline network.
Jason Jacobs: Mm-hmm [affirmative]-.
Paul Eremenko: Building a tanker network, whether those are tanker ships, similar to LNG tankers, or tanker trucks or Cistern train cars, right? And then storage reservoirs at the airport, and then a fleet of hydrogen-specific refueling trucks. And the third is localized production, which, you know, as you move the production closer to the airport and put in an electrolyzer or and a compressor or a small liquefaction plant at each airport, right? Those are probably the three alternative options.
They are all significantly more capital intensive and have significantly greater losses if you add up the hydrogen chain. And we've done that comparison before [laughs], before we were able to convince ourselves that this is the right thing to do. We think that the modular distribution approach, these modular capsules, is novel. And we have secured IP around it, which is pretty broad walking IP in the space. Of course, you know, we don't intend to use it to block. We intend to use it in order to get widespread adoption of this technology.
And as I said, we want ... Our mission is to make hydrogen as ubiquitous as possible, as quickly as possible. So we're willing to partner and work with everyone and anyone in this space to make them successful at their mission to get there.
Jason Jacobs: And what are the aspects of what you're trying to do that you feel like are kind of ripe and ready and that you're confident about, and then where are the biggest risks or assumptions or things that you're striving for that, that are keeping you up at night?
Paul Eremenko: So we picked the regional segment specifically because nothing has to be invented to make this happen. These are existing fuel cells. These are existing electrical motors. There's some bard engineering that needs to go into it to do the integration and, and get it to work right. But we know how to do this, right? There's nothing ... Like I said, nothing needs to be invented.
The biggest risk to getting to the regional market is honestly the regulatory timeline, the certification timeline. We are certifying something new, which is a hydrogen fuel cell electric powertrain. Each component of it is actually not an issue of first impression for the FAA or EASA. So hydrogen fuel cells have been studied. Electric motors have been studied. Putting it all together introduces new coupled failure modes, right, of this end-to-end system. And so we got to work through that process with the regulatory agencies. It's a good process, right? I mean, I do not disparage it in any way, because it has created the modern air transportation system, which is incredibly safe and incredibly scalable.
But we ... So we got to work through that process. There is obviously an external party, counterparty, which is the regulator. And so we don't have full control over the timeline. So that's probably the biggest risk. I think it's a risk of when, not if, and we try to mitigate that risk by building the, a world class team that includes folks like my former boss, the CEO of Airbus, former CEO of Airbus Tom Enders, uh, former deputy FAA administrator Carl Burleson, former FAA chief scientist who is a Nobel Prize winner, part of the IPCC committee, but did the Paris Agreement climate work Lourdes Maurice, and a couple other folks, right?
So we've built the best team you could possibly imagine to get through this regulatory hurdle and to get through it on a reasonable timeline, which we believe is 2025 as sort of our best estimate.
But there isn't really a tech risk and there really isn't a huge business risk, because the economics, like I said, the economics of green hydrogen, they're there 'cause we have forward priced offtake agreements today in hand with credible partners that say we can, that they will sell us hydrogen starting in 2025 at costs that are equal to or better on energy equivalent basis t-, to jet fuel.
So business risk, minimal. And that gives airlines a value proposition they can't refuse, right? Equivalent or better operating cost and no emissions. So business risk is well in hand, technical risk is well in hand, and regulatory risk, we've built the best team that we possibly can to, to manage that and deliver on time.
So that's the regional segment. The other sectors, obviously that are further out, you know, like we talked about single aisle, of course there is a question. Can we persuade? Can we de-risk Airbus, Boeing, maybe Comac as a new entrant to, to take on hydrogen? Urban air mobility, the eVTOL sector is another one that could benefit.
Jason Jacobs: So in terms of staging, Paul, I mean the system's nature of this and all the different stakeholders that are involved, how does one break this up into manageable chunks, and then what is that kind of first phase look like as you gear up to enter the market?
Paul Eremenko: We are coming towards the end of basically what's our seed phase. So we're coming up on about a year of existence. And in that year, what we've done is we've done the fairly detailed end-to-end engineering design, both of the hydrogen distribution side, so the capsules, the whole module, the compatibility with the intermodal freight network, as well as on the aircraft powertrain side. And we're building full scale hardware at this point, so we're building full scale module for gas use hydrogen, another one for liquid hydrogen for the regional application, and a subscale, uh, powertrain that integrates with Plug Power fuel cell, the MagniX electric motor, and a lot of the software that goes around controlling that and managing the, the heat loads and things like that.
So that's what we've done to date on the technology, and then, as you rightly point, there's a lot of moving parts. I mean, we are a value chain integrator basically. So we have partnerships that we discussed earlier in the podcast with all of the key players, and those are in hand, right? So those are ... that's what we've spent a year doing this. One of my co-founders is a lawyer and our head of partnerships and is very talented at bringing these parties together.
And so we've strung together, you know, offtake agreements, OEM agreements, airline LOI, letters of intent, right, so interest from the airline to actually commitment rather than interest from the airline to actually purchase aircraft. So we've strung all of that together over the course of the past year, and we're getting ready to move on to the next phase, which is really going to focus on meeting some of the early regulatory milestones and negotiating the certification bases with the regulatory agencies. That's the key milestone, is agreeing on what criteria we will be certified by, because this is a new thing, hydrogen powertrain.
And then we move on to first experimental flight in early 2023, and then a certification flight test campaign that gets us to certification and production on the modules by late 2024, early 2025.
Jason Jacobs: And then how has the company been capitalized to date, and then how do you think about capitalizing the company directionally in terms of both the amount of capital you'll need, but also the, the type of capital, given that this is likely not the kind of business that, that most venture capitalists, for example, are, are used to getting involved with from a requirement standpoint, from a time horizon standpoint, or even given some of the regulatory risk?
Paul Eremenko: So thus far, we've had a couple of really great investors that have gotten us through our first phase. Probably most notable are Trucks, which is a Silicon Valley, a well known Silicon Valley transportation fund, Jeff Schox and Reilly Brennan, as well as a strategic investor, which is Plug Power, our fuel partner and also a hydrogen offtake partner. And Plug Power, together with Trucks and a few smaller investors, have gotten us to where we are today.
Overall, this is about a 300 million dollar undertaking. I think about 180 or so, maybe a little, a little more than half, I should say is going to end up needing to be equity financed. The rest we can finance through debt, because obviously we have assets like aircraft and production line for modules and things like that that we can borrow against and as well as non-diluted government support from the US government to as well as from regional and, and other governments.
And so that's the overall scope. And then the kinds of investors, it needs to be a diverse set, right? For sure, there are strategic investors. So Plug Power is a good example one one that we have already. And those can take a variety of different forms that open new markets, right, or that connect us to some of the segments of the value chain where we have or need key partnerships.
Certainly, we need deep pocket financial investors to get through this. But I, I don't agree entirely with the premise of your question, right, saying that the time horizon is beyond what typical VCs are used to. We're going to be generating revenue in 2025, and it'll be ... the growth trajectory is very clear after that. And I expect this company, that we will be able to IPO this company short thereaf-... a few years thereafter, again, because it has very stable, very predictable long-term revenue streams, right? Airlines like long-term fuel contracts, 'cause it smooths out their volatility in operating costs.
And so I think this company is going to be profitable and good sized just in the regional market, and then the urban air mobility eVTOL market, you know, if it explodes the way it's meant to explode ... Maybe explode is a bad choice of words here. If it grows rapidly [laughs], as, as quickly as, as we would hope, that's a huge upside. That's a 100 billion dollar fuel market opportunity for us. And then the single aisle in the 2030s is a, is about a 300 billion dollar fuel opportunity.
And so, you know, I think we can attract all sorts of investors, given the kind of growth and returns profile, very healthy margins in this business that we forecast.
Jason Jacobs: Great. And, I mean, there's a lot of things that you can control, and I would imagine that your head's down and working to control those things and get the things built that you need to. What about the things that you can't control? If you could wave your magic wand and change one thing that is outside the scope of your control that would most accelerate our ability to decarbonize aviation, what is that thing and how would you change it?
Paul Eremenko: Um, corporate culture across the aerospace industry, I guess, is, is what I would say. As I said, I've spent a number of years inside big aerospace, and it's, it's quite frustrating. It's quite frustrating trying to get large organizations to embrace new technologies and to move at the pace that we really need to move. And so if I had a magic wand, I would try to transform the speed, get rid of the incrementalism, and get people to think big inside the big aerospace companies.
Jason Jacobs: And then from the MCJ community who's listening to the show, how can they be of service f-, for you and who do you want to hear from?
Paul Eremenko: Well, for sure, we are ... So we're always recruiting. We're growing now. We're going to grow even faster here in the next couple months. And so folks can follow me on Twitter. I'm @PaulEremenko. We're Hydrogen.aero as a company. We're revamping the website, so it'll be much nicer here in the next week or so. And you know, we have a voracious appetite for talent and for partners in the various segments of the value chain that we talked about in this podcast. So please get in touch.
Jason Jacobs: Good. And is there anything I didn't ask you that I should have, Paul, or any parting words for listeners?
Paul Eremenko: Well, I think I would just reiterate the fact that I think we as, as an aviation, as an aerospace sector, I think we kind of have a moral obligation, but we also have a pressing business need to move much more quickly than we have been to decarbonize. And the technology exists, right? So this is not science fiction. This is not wishful thinking. The technology exists. We just need to deploy it and we need to move quickly.
Jason Jacobs: Well, it's exciting to see, uh, a seasoned team like the one that you've assembled, uh, setting out to tackle this important problem. And I'm excited to see where it goes, and I'm excited to see aviation get decarbonized, because as we've talked about, we really need. So thanks so much, Paul, for coming on the show. And best of luck to you and to the Universal Hydrogen team.
Paul Eremenko: Thanks, Jason. I'm a huge fan. I appreciate you having me on.
Jason Jacobs: Hey, everyone. Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at MyClimateJourney.co. Note, that is dot co, not dot com. Someday, we'll get the dot com, but right now, dot co. You can also find me on Twitter at JJacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear.
And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.
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