Germany on Tuesday launched a bidding process for subsidies to support energy-intensive firms switching to green production in a 4 billion euros ($4.37 billion) funding round, the economy ministry said on Tuesday.

As part of Germany's ambitions to become climate-neutral by 2045, Berlin plans to award companies in sectors such as steel, glass, paper and chemicals 15-year subsidies in return for reducing carbon emissions in production.

The European Commission has approved the instrument where companies will be selected through a bidding process while competing over cutting emissions at the lowest cost.

Through the so-called climate protection contracts, companies will be compensated for the extra costs of green production in industries where climate-friendly production processes cannot currently operate competitively.

"Today is a good day for Germany as an industrial location, for climate protection and for sustainable jobs in our country," said Economy Minister Robert Habeck.

Berlin had originally planned to offer subsidies up to a mid double-digit billion euro sum, but the programme was put at risk by last year's constitutional court ruling stopping the government from using some 60 billion euros of debt for climate protection projects.

($1 = 0.9148 euros) (Reporting by Markus Wacket Writing by Riham Alkousaa Editing by Madeline Chambers)