LONDON (Reuters) - Climate technology firm AIR COMPANY said it has secured backing from aviation fuel supplier Avfuel in its latest funding round as it looks to convert carbon dioxide into a range of more climate-friendly products.

Using a process that mimics photosynthesis to turn carbon and hydrogen in the air into impurity-free alcohols that can be used in everything from vodka to perfume, it said the $69 million Series B raise would finance engineering and research.

Alongside Avfuel, which led the round, were new backers including Alaska Airlines and venture firm Lowercarbon Capital. Existing investors including the venture arms of carmaker Toyota ( TM ) and airline JetBlue ( JBLU ) also took part.

Going forward, Avfuel would be the preferred provider of distribution and logistics for the clean jet fuel and would join the board, AIR COMPANY said in a statement.

"Our technology is designed to be modular to facilitate adoption and scalability," said AIR COMPANY co-founder and Chief Executive Gregory Constantine.

To-date, the firm has offtake agreements for over a billion gallons of sustainable aviation fuel with airlines including JetBlue ( JBLU ), Virgin Atlantic and Boom Supersonic, and also has a contract with the Department of Defense.

The firm has also completed a first unmanned flight using its jet fuel, which does not need to be blended before use.

"The aviation sector faces a critical challenge in meeting the growing demand for sustainable aviation fuel," said C.R. Sincock, Executive Vice President of Avfuel Corporation said.

"SAF represents a crucial pathway to decarbonization, and AIR COMPANY's innovative CO2-derived SAF technology stands out as a leading solution.

(Editing by David Evans)