Northwich CO2 plant 'worth 22,000 cars off the road'
The UK's first major carbon capture plant will be built in Cheshire.
Tata Chemicals Europe has been given a £4.2m government grant towards the £16.7m project, which will recycle 40,000 tonnes of waste carbon dioxide for use in manufacturing.
It will have the same effect as taking 22,000 cars off the road, energy ministers claim.
Carbon capture is part of the government's plan to hit its own zero net emission target by 2050.
Environmental campaigners said funding for carbon capture was "a step in the right direction".
The Northwich plant will be the UK's biggest carbon capture facility when it begins operating in 2021, Tata Chemicals said.
It is also claimed that it will be the first in the world to purify and liquefy CO2 as a raw material to make sodium bicarbonate, which is used in food and pharmaceutical processing.
The plant will extract the CO2 - which contributes to climate change - by exposing waste gases to chemical solvents known as amines.
It will represent 11% of the total emissions from Tata's power plant, which provides steam and power for the company's Northwich operations and other businesses in the area.
Tata Chemicals managing director Martin Ashcroft said the project was "hugely exciting" and hoped it would "demonstrate the viability of carbon capture and utilisation".
Other carbon capture plants exist in the UK, most notably at the Drax power station in Selby, North Yorkshire, which is capable of recycling a tonne of CO2 each day.
Drax was granted a further £500,000 towards a £1m project by the Department for Business, Energy & Industrial Strategy, which announced on Thursday a total of £26m of funding for nine projects that encourage industry to recycle waste CO2.
Energy minister Chris Skidmore said: "If we are to become a net zero emissions economy and end our contribution towards global warming, then innovative schemes like Tata Chemicals' will be essential."
In 2015, the government scrapped a proposed £1bn grant for the development of carbon capture projects.
Friends of the Earth's head of policy Mike Childs said: "While this funding is a step in the right direction, far greater support is needed to drive up efficiencies and force down costs.
"However, carbon capture must not be used as an excuse to keep the UK hooked on fossil fuels."