A CHEMICALS firm says a £7m investment will help it cut greenhouse gases.

Huntsman Polyurethanes is installing new steam boilers and heat-recovery machinery at its plant in Wilton, near Redcar.

Bosses believe the move will allow the business to cut carbon emissions by up to 28,000 tonnes every year.

The investment came as an industry group behind plans to clean up the atmosphere criticised a government decision to pull £1bn emissions funding.

Officials at The Carbon Capture and Storage Association say Downing Street’s decision to axe financial backing for a development aimed at taking and holding CO2 from coal-fired power plants and heavy industry before they enter the atmosphere could add £2bn to household bills every year.

The government pulled funding in last year’s Autumn Statement leaving a Teesside project to develop a pipeline to capture noxious gases from the region’s heavy industry in doubt.

However, Huntsman, which makes products that are eventually used in a number of applications, such as insulation and trainers, says its plans are based on a firmer footing.

The company has received financial backing from UK Energy Efficiency Investment, the fund managed by Sustainable Development Capital Limited (SDCL), and UK Energy Efficiency Investments.

Officials say the development will include steam-raising boilers and compressor technology, which will save greenhouse gas emissions to the equivalent of removing 12,750 cars from the road.

They added energy firm Engie has been appointed as contractor to oversee the work, which has started and is expected to be completed next summer.

Paul Rawson, Engie UK divisional chief executive for energy solutions, said: “We are delighted to be working with Huntsman. Through the delivery of the design, build and on-going operation and maintenance of the scheme, we will provide a solution that will significantly reduce carbon emissions.”

Edward Northam, head of investment banking at the UK Green Investment Bank, added: “Many manufacturers continue to rely on low-efficiency boilers to service their energy needs. Huntsman is an example; it has recognised it can cut costs and help mitigate climate change by making its processes more energy efficient.”