In 2019, two founders launched vodka made from carbon dioxide; their startup later secured a US defence contract worth up to $65 million to develop synthetic-fuel technology

Air Company, the New York startup founded by Gregory Constantine and Stafford Sheehan in 2017, set out to demonstrate how carbon dioxide could be converted into useful products. Its early focus included vodka made using alcohol produced from carbon dioxide and hydrogen. The company later expanded its work towards industrial applications, including synthetic aviation fuel. In February 2023, the US Department of Defense’s Defense Innovation Unit announced a contract with a ceiling of $65 million to develop synthetic-fuel production technology for use in contested environments. AIRCO, as the company is now known, cited a $67 million contract for the same project in a March 2026 announcement. The public announcements do not explain the difference between the two figures, and neither should be mistaken for confirmation that the full amount has been paid.Gregory Constantine and Stafford Sheehan founded Air Company to turn carbon dioxide into useful productsAir Company was founded in 2017 by Constantine, a business and marketing executive, and Sheehan, a chemist with a doctorate from Yale University. Their expertise addressed different parts of the challenge: Constantine focused on building a business around the technology, while Sheehan developed the chemical process for converting carbon dioxide into useful products. The company’s approach was to use carbon dioxide as a feedstock rather than treating it solely as a waste product. Its technology combines carbon dioxide and hydrogen to produce alcohols and other chemicals. Those products can then be used in consumer goods or as building blocks for synthetic fuels.The founders initially introduced a consumer product to demonstrate the technology. In November 2019, Air Company launched Air Vodka, made using ethanol produced from carbon dioxide and hydrogen. The company presented it as a premium spirit and a demonstration of its conversion process. The vodka helped make an unfamiliar technology tangible to consumers. Instead of asking people to understand an industrial fuel-production process, the company could show them a product made using its underlying chemistry. However, the vodka was a demonstration of the technology, not evidence that the company had already solved the cost and production challenges involved in manufacturing aviation fuel at scale.Air Vodka, perfume and hand sanitiser helped demonstrate the technologyAir Company expanded beyond vodka into fragrance products and hand sanitiser. During the COVID-19 pandemic, the company shifted part of its production towards hand sanitiser, using its alcohol-production capabilities to meet demand for the product. The consumer business also gave the company a way to demonstrate that its technology could produce commercially usable materials. Producing a premium spirit, fragrance or sanitiser involves different requirements from producing aviation fuel, but the products drew on the company’s broader expertise in converting carbon dioxide into chemicals.The company subsequently focused more heavily on industrial applications, including synthetic fuels. This shift required moving beyond relatively small consumer-product batches towards systems capable of producing fuel in larger quantities. The distinction matters because making a product from captured carbon dioxide does not automatically make it carbon-negative. The overall environmental impact depends on factors including the source of the carbon dioxide, the hydrogen-production method, the energy used and the full lifecycle of the resulting fuel.The $65 million defence contract is intended to support synthetic fuel production in the fieldOn February 28, 2023, the Defense Innovation Unit announced that it had awarded Air Company a contract with a ceiling of $65 million under Project SynCE, short for Synthetic Fuels for the Contested Environment. The project involved the US Air Force, the Operational Energy Capability Improvement Fund, the Department of Energy and the US Army’s Office of the Chief of Engineers. According to the Defense Innovation Unit’s announcement, the project aims to develop technology that can produce synthetic fuels close to where they are needed. Military operations often depend on long supply chains involving ships, tanker aircraft and ground convoys. Those routes can become vulnerable during conflict, making fuel availability a logistical and operational concern.The proposed system is intended to produce drop-in synthetic fuels that can be used in aircraft without requiring them to be blended with conventional fuel, according to the Defense Innovation Unit. Air Company’s process uses carbon dioxide and hydrogen to manufacture fuel, with the goal of reducing dependence on transported fuel supplies. The $65 million figure is a contract ceiling, not a guarantee that the government will pay the full amount. It represents the maximum value announced for the contract rather than confirmation of money already disbursed or fuel already delivered at commercial scale.AIRCO’s later announcements cite a $67 million contract and approximately $70 million in government workOn March 10, 2026, AIRCO announced development of its MAD Fuel System, a containerised platform intended to produce synthetic fuels at or near the point of use. The company expands MAD as “Mobile, Adaptable and Dynamic.” The system is designed to combine carbon dioxide, hydrogen and an energy source to produce fully formulated synthetic fuels, including aviation fuel. A containerised system could, in principle, be transported to remote sites instead of requiring fuel to be shipped over long distances. The announcement describes a technology under development, rather than a completed network of operational fuel-production units.AIRCO’s March 2026 announcement cited a $67 million Defense Innovation Unit contract through Project SynCE. The same announcement described approximately $70 million in work involving multiple US government offices, including a new $15 million Strategic Funding Increase award from AFWERX, the US Air Force’s innovation organisation. The public figures do not clearly explain how the $65 million ceiling announced in 2023 relates to the later $67 million figure, or precisely how the approximately $70 million total is calculated. They should therefore be reported separately rather than added together or presented as a reconciled funding total. The company has also identified airline partners, including JetBlue and Virgin Atlantic, in its public materials. Such partnerships indicate commercial interest, but they should not be interpreted as proof that those airlines are already purchasing synthetic fuel from AIRCO at commercial scale.The challenge is scaling synthetic fuel productionAIRCO’s work illustrates the difference between demonstrating a chemical process and producing enough fuel to serve a large industrial customer. The company’s consumer products showed that its carbon-conversion technology could be used to make saleable goods. The defence project, by contrast, requires a system capable of producing usable fuel reliably in environments where energy, equipment and logistics may be constrained. The environmental case also depends on how the fuel is produced. Synthetic fuel made from carbon dioxide can potentially reduce reliance on fossil-derived feedstocks, but its lifecycle emissions depend on the energy and hydrogen used in production. Carbon dioxide captured from one source and later released when fuel is burned does not, by itself, establish that the entire process removes more carbon than it emits.You use AI every day. Now get your AI Quotient. Take the AIQ test.