Airbus, Barclays, Saudis back hydrogen aviation startup ZeroAvia

Hydrogen aviation startup ZeroAvia has raised part of a Series C round co-led by aircraft giant Airbus, British bank Barclays, and the investment fund of the Saudi Arabian megacity project Neom.

Why it matters: Hydrogen-powered aircraft are moving closer to commercialization and could be a key way for the aviation sector to decarbonize.

Details: ZeroAvia didn't disclose the size of the Series C round, but said it's the largest to date for the Hollister, Calif.-based company, which previously closed a Series B round of $72 million.

• Barclays co-led the deal through its Sustainable Impact Capital fund.
• Participating investors joined the round, including Breakthrough Energy Ventures, Horizons Ventures, Alaska Airlines, Ecosystem Integrity Fund, Summa Equity, AP Ventures and Amazon Climate Pledge Fund.
• ZeroAvia's co-founder and CEO Val Miftakhov said the company will use the proceeds to get its first engine, which can power a regional turboprop plane, certified.

Of note: Neom is a futuristic, and controversial, Saudi Arabian megacity project backed by the $700 billion Saudi sovereign wealth fund, Saudi Public Investment Fund, or PIF.

• The Neom Investment Fund is an $80 billion fund investing in companies that agree to operate in Neom.
• Miftakhov said Neom is developing a large hydrogen project, airlines and airports and is "a great early-deployment strategic target for us."

Zoom in: ZeroAvia makes hydrogen-electric engines for aircraft in which onboard hydrogen powers fuel cells that produce electricity and run an electric motor.

• Earlier this year the company flew a 19-seater test flight in the U.K. with the fuel cells and hydrogen stored in the cabin and the seats removed. Final design will place that hydrogen gear externally.
• Previously, Miftakhov founded, ran and sold his EV smart-charging company eMotorWerks to Enel subsidiary EnerNOC.

Big picture: The aviation sector is being pushed by regulation and sustainability commitments to cut carbon emissions.

• Many within the sector see sustainable aviation fuel — bio-based fuel that can replace petroleum-based fuel — as the key near-term decarbonization technology, but SAF supplies remain tight.
• ZeroAvia is one of a handful of startups and big players that is designing the technology for hydrogen-powered aviation.