Air Company raises $69M to convert CO2 into jet fuel

Investors are betting big on Air Company’s efforts to cut carbon emissions from planes.

The New York–based startup announced today that it raised $69 million in a Series B funding round led by Avfuel, an aviation fuel supplier, along with Lowercarbon Capital, IQT, Alaska Airlines, and other investors. That money will go toward building commercial production facilities for sustainable aviation fuel — a move that could help expand production of SAF, which remains limited in supply and expensive.

“The key impact Air Company can have toward fighting climate change is we eliminate the need for crude oil,” Stafford Sheehan, Air Company’s co-founder and chief technology officer, told Canary Media.

The company — and the SAF industry in general — has a long way to go before realizing that vision.

Jet fuel combustion is responsible for 2 percent of global CO₂ emissions linked to energy use. If the aviation sector transitions to using SAF, total flight emissions could fall by up to 80 percent.

But widespread adoption of SAF, an umbrella term for lower-carbon fuels, has been slow. In 2023, 24.5 million gallons of SAF were used to fuel U.S. flights. That’s a fraction of the roughly 69 million gallons of fossil jet fuel the country burns every day. As climate regulation and voluntary corporate commitments push airlines to cut emissions, the demand for SAF is expected to grow quickly, according to McKinsey.

Air Company makes its SAF using a proprietary system that involves capturing carbon dioxide directly from the atmosphere and combining the CO₂ with hydrogen to create paraffins — colorless, oily liquids that it says can be dropped into conventional jet engines. Companies such as Twelve and LanzaTech are also vying to repurpose CO₂ into sustainable jet fuels.

Right now, Air Company operates two pilot facilities in the Brooklyn neighborhood of Bushwick, both of which produce small batches of CO₂-derived fuel for test flights. The startup plans to use its new investment to build an undisclosed number of ​“mini refineries,” which it aims to complete within the next two or three years, according to the founders. These refineries will ​“collect data” to try to prove that its technology can work for large-scale SAF production.

“In order to really fight climate change, we need to build plants that are the size of refineries,” Sheehan said in reference to oil plants, which can occupy up to several hundred football fields’ worth of land. ​“Getting up to that level of scale is what a lot of this funding is going toward.”

The startup declined to disclose how big the new facilities will be, where they will be located, and specific SAF production targets, though Sheehan said it will produce ​“hundreds and millions” of gallons of SAF — ideally in the ​“single-digit billions” — by the end of the decade.

If all goes to plan, Air Company would be one step closer to fulfilling its batch of orders to JetBlue and Virgin Atlantic — airlines that have agreed to buy a total of 125 million gallons of SAF from the firm. Air Canada and aircraft startup Boom Supersonic have also agreed to buy Air Company’s fuel.

The startup doesn’t just provide green fuels to airlines. It has a $65 million contract with the U.S. Department of Defense to build its carbon capture and fuel production facilities on U.S. Air Force bases. It also partners with New York University’s Tandon School of Engineering to develop SAF for NASA’s next generation of rockets.

But so far, Air Company’s SAF has been used only on test flights. In 2022, the U.S. Air Force flew a large drone powered by the startup’s low-carbon fuel. Before the fuel can be used on commercial flights, it — like all forms of SAF — must be tested and certified by ASTM International, a standards body.

“One of the core deliverables for our business over the next couple years as part of the fundraise is to go through and finalize that regulatory process,” Gregory Constantine, Air Company’s co-founder and CEO, told Canary Media. ​“That will allow us to then sell that fuel as a commercial fuel to airlines.”

Even if it overcomes this regulatory hurdle, scaling up its carbon-conversion technology by the end of the decade won’t be easy. Sheehan called Air Company’s expansion plans an ​“aggressive timeline.”

Still, the startup remains confident that it has the capacity to make it happen.

“We’re very bullish in our ability to execute at pace and at scale,” Constantine said. ​“But getting to scale quicker and faster is a big part of the challenge for a lot of organizations. It’s one that we spend a lot of time working on, and one that is integral to long-term success.”