* Pressure mounts on firms in Europe's top manufacturer
* Steel group Thyssenkrupp looks to innovate to survive
* Ideas include chemical reactors and microbe filters
By Ludwig Burger
FRANKFURT, Nov 27 (Reuters) - Filtering carbon dioxidethrough microbe-infested bubble baths is just one of the ideasbeing developed by top German industrial companies as they comeunder growing pressure to cut their emissions of greenhousegases.
As world leaders gear up for climate talks in Paris, firmslike Thyssenkrupp and Bayer's plastics unit Covestro see both a threat and an opportunity.
The threat is that harsher European penalties on emissionswill force manufacturers to relocate to regions with lessstringent rules. That worries some in Germany, which emits moreCO2 than any other European country and depends on manufacturingfor a larger share of its economy than its neighbours or theUnited States.
The opportunity is to harness technology to convert waste gases into useful materials, making German firms pioneers inclimate protection.
Steel and technology group Thyssenkrupp has formed aconsortium to process CO2-containing waste gas from steel millsinto products such as ammonia for nitrogen fertilisers ormethanol, a basis for various chemical products.
The so-called Carbon2Chem consortium, which includes E.ON, Akzo Nobel, Linde and Evonik, has 15 years of development work ahead of it, but itschemical reactor concept has vast implications.
Iron and steel makers account for 6.7 percent of global CO2emissions, almost entirely via steel mill gases.
Under the scheme, the additional energy that is needed inthe process would come from hydrogen generated during times ofexcess supply of wind and solar power.
"Basic chemicals are mainly derived from oil and gas thesedays," said Thyssen's Chief Technology Officer Reinhold Achatz.
"That's exactly where steel mill gas could come in after asuccessful Carbon2Chem launch. We would be re-using rawmaterials that were already used in steel production."
Others, like unlisted Brain Biotech, are harnessing thepower of biology, blowing flue gases through a bacteria-filled bubble bath.
Brain, which conducts research for chemical, cosmetics andfood companies, is genetically engineering microbes so that theymetabolise CO2 into succinic acid, a versatile raw materialwhose uses include polyesters and food additives.
Elsewhere in Europe, Spanish energy group Repsol and rival Shell are also taking organic approaches inseparate projects, seeking to boost the growth of energy cropsfor biofuel by funnelling CO2 from refinery gases intogreenhouses.
While most of these schemes rely in part on public-sectorfunding, companies say their willingness to spend millions onclimate projects will depend on staying competitive as moreenergy-related levies loom.
"GIVE US A CHANCE"
Thyssenkrupp, facing fierce competition from Chinese rivals,says higher prices for carbon emission rights would throw theentire European steel industry into doubt, and that its steelmills are already pushing the limits of energy efficiency.
It plans, with its partners, to invest 1 billion euros ($1.1billion) in a full-blown chemical reactor by 2030 if its pilotis successful.
"Politicians need to give us a chance for there to be asteel industry in Germany in 2030 at all so that we canimplement this project," said Achatz.
That echoes a common worry in industrial boardrooms: thatBerlin's efforts to spearhead the fight against greenhouse gaseswill only drive energy-intensive operations to less regulatedcentres overseas.
After Group of Seven leaders pledged in June to abandonfossil fuels by the end of the century, the chief executive ofGerman chemicals and oil group BASF quipped: "Youalso have to stop breathing, because we are all emitting CO2".
But behind the rhetoric, creative approaches aremushrooming. Bayer's Covestro is planning to put a polyurethanefoam production line on stream next year that will replace someof the petrochemical precursor materials with CO2.
Covestro is seeking to apply the concept, which hinges onchemical catalysts prodding CO2 molecules into recombining intosomething useful, to other production lines.
Spain's Repsol is working on a plastics project, dubbedNeospol, that is based on similar principles.
(Additional reporting by Rodrigo de Miguel in Madrid andGeorgina Prodhan in Frankfurt; Editing by Mark Trevelyan)