Siemens and Evonik have partnered to turn carbon dioxide into high-value chemicals.
The joint initiative, called the Rheticus Project, will use fermentation and clean energy electrolysis to convert the greenhouse gas into products such as butanol and hexanol, which are feedstocks for special plastics and food supplements.
It is expected to be significantly more cost-effective and environmentally-friendly than traditional processes.
The equipment used will also serve as an energy store able to respond to power fluctuations and help stabilise the grid.
The project is due to run for two years – the first test plant in Marl, Germany is scheduled to be operational by 2021.
The companies say the next stage could see a plant with a production capacity of up to 20,000 tonnes a year.
The project is set to receive €2.8 million (£2.4m) in funding from Germany’s Federal Ministry of Education and Research.