Membranes capable of capturing water from flue gases or drying processes could be commercially available in four years, according to Dutch energy services firm Kema.
The company has been awarded £3m by the European Commission to develop the technology.
Kema has already tested pilot membranes, with a water-capturing coating, in a Dutch power plant and a German waste incinerator.
These tests suggest the membranes could collect 40% of water normally found in flue-gases. For a 400-megawatt coal power plant that amounts to some 60,000 litres an hour, Kema says. The membranes should be competitive with existing technologies that produce demineralised water for use by industry.
Kema will use the EU funding to develop commercial-scale membranes over the next 18 months, and then test them in five sites. This will include a gas plant in Spain and a Dutch paper mill.
Debbie Stringer, energy and environment manager at the Confederation of Paper Industries, said UK paper mills only vent "small amounts" of water vapour. "But that being said [the technology] would be of interest... as every bit helps."
Kema says the benefits to the paper industry would come from being able to reuse dehumidified hot air and so make energy savings.