A liquid air cycle engine (LACE) is a type of spacecraft propulsion engine that attempts to increase its efficiency by gathering part of its oxidizer from the atmosphere. A liquid air cycle engine uses liquid hydrogen (LH2) fuel to liquefy the air.
In a liquid oxygen/liquid hydrogen rocket, the liquid oxygen (LOX) needed for combustion is the majority of the weight of the spacecraft on lift-off, so if some of this can be collected from the air on the way, it might dramatically lower the take-off weight of the spacecraft.
LACE was studied to some extent in the USA during the late 1950s and early 1960s, and by late 1960 Marquardt had a testbed system running. However, as NASA moved to ballistic capsules during Project Mercury, funding for research into winged vehicles slowly disappeared, and LACE work along with it.
Conceptually, LACE works by compressing and then quickly liquefying the air. Compression is achieved through the ram-air effect in an intake similar to that found on a high-speed aircraft like Concorde, where intake ramps create shock waves that compress the air. The LACE design then blows the compressed air over a heat exchanger, in which the liquid hydrogen fuel is flowing. This rapidly cools the air, and the various constituents quickly liquefy. By careful mechanical arrangement the liquid oxygen can be removed from the other parts of the air, notably water, nitrogen and carbon dioxide, at which point the liquid oxygen can be fed into the engine as usual. The hydrogen is so much lighter than oxygen that the now-warmer hydrogen is often dumped overboard instead of being re-used as fuel, at a net gain.