David Cameron agrees 'Tees Valley' City Deal
Prime Minister David Cameron has agreed a City Deal with councils around Teesside and Darlington which will secure £28m of private funding.
It is hoped the agreement will help the area develop carbon capture technology businesses.
Mr Cameron said the deal was a "huge boost" for jobs in the area.
"It will also give the area greater power and freedoms, allowing local people to take more decisions on the economy for themselves," he said.
Speaking about predictions for job creation as a result of the City deal, Stockton North Labour MP Alex Cunningham said: "I hope we do see these 3,500 jobs but we don't know when they're going to happen or what form they will take."
As part of the agreement, an "innovative waste heat network" will be developed which will see heat from heavy industry used to power homes and businesses.
Local firms will also get access to a business hub offering them advice and support.
The City Deal has been signed with the regional growth body, Tees Valley Unlimited (TVU), and councils covering Redcar and Cleveland, Middlesbrough, Stockton, Hartlepool and Darlington.
TVU chairman Sandy Anderson said it would allow the region "to help shape government policies that affect the local area".
Middlesbrough mayor Ray Mallon said the agreement may not prove to be a "silver bullet" but was a "step in the right direction".