Germany, China, and the Race for Hydrogen Supremacy – Is the U.S. Falling Behind?

In this episode of The Hydrogen Podcast, we explore two major hydrogen developments reshaping the global energy landscape.

🇩🇪 Germany: Deutsche ReGas secures $127 million in EU funding to launch a major hydrogen hub in Lubmin, Germany—powered by offshore wind and connected to Europe’s hydrogen transport backbone.

🇨🇳 China: Sinopec launches a $690 million hydrogen venture capital fund, doubling down on electrolyzer innovation, FCEV infrastructure, and scale-up of low-CI hydrogen production to dominate the global market.

🇺🇸 The U.S. Response: With the repeal of the Section 45V tax credit via the “One Big, Beautiful Bill Act,” America must now focus on economics-first hydrogen—SMR with CCS, natural hydrogen, and methane pyrolysis—all producing hydrogen at $1–$2/kg.

Plus, we spotlight how natural hydrogen could supercharge ammonia production in the Midwest and what public-private partnerships must do to keep pace.

📈 All cost data sourced from DOE, IEA, and BloombergNEF to provide the clearest picture of hydrogen’s economic future.

🎧 Listen now to learn:

• How Germany and China are scaling hydrogen innovation
• The real opportunity for the U.S. with natural hydrogen
• Why ammonia production could become America’s hydrogen ace
• What it will take to remain globally competitive by 2030

Transcript

Today, I’m diving into two Reuters articles that spotlight international strides in hydrogen development. First, I’ll explore how Deutsche ReGas is harnessing EU funding to make Lubmin, Germany, a hydrogen powerhouse. Then, we’ll zoom to China to unpack Sinopec’s $690 million venture capital fund aimed at fueling hydrogen innovation. We’ll wrap with a sharp focus on what the U.S. must do to challenge China and Germany, leveraging low-cost, low carbon intensity (CI) hydrogen production to stay ahead in the global hydrogen economy, with a nod to natural hydrogen powering ammonia production in the Midwest. All cost estimates per kilogram of hydrogen are sourced from the U.S. Department of Energy (DOE), International Energy Agency (IEA), and BloombergNEF, aligning with industry benchmarks. All of this on today’s hydrogen podcast.

Let’s start with the Reuters article from May 21, 2025, titled "Deutsche ReGas gets EU funding for Lubmin hydrogen project." This piece showcases Europe’s bold hydrogen ambitions, as Deutsche ReGas, a private energy infrastructure developer, secures €112 million—roughly $127 million—in public grants from the European Union’s Hydrogen Bank. Part of a €992 million auction backing 15 projects across five countries, this funding targets decarbonization of industries that pump out about 1 billion metric tons of CO2 annually, or 30% of EU emissions. The Lubmin project, perched on Germany’s Baltic Sea coast, is a strategic gem, tapping offshore wind farms to power electrolysis using Baltic Sea water, producing hydrogen with emissions below 0.45 kg CO2e per kilogram, a benchmark for low-CI production. Lubmin’s history as a liquefied natural gas (LNG) terminal during the 2022 energy crisis, now shifted to Mukran, makes it a ready-made hub for hydrogen. Its proximity to Germany’s planned hydrogen core transport network, rolling out from 2025 to 2032, ensures seamless delivery to industrial powerhouses like steel and chemical plants.

Economically, the €112 million grant is a lifeline, offsetting the $4–$6 per kilogram cost of electrolytic hydrogen, per DOE and IEA estimates, compared to hydrocarbon-derived hydrogen via steam methane reforming (SMR) at $1–$2 per kilogram, which emits 10–12 kg CO2 without CCS. The grant covers 20–30% of the project’s $400–$600 million capital cost for a 200–500 MW electrolyzer plant producing 40–100 tons daily, narrowing the cost gap and aligning with Europe’s goal to make low-CI hydrogen competitive, potentially hitting $2–$3 per kilogram by 2030 if renewable electricity drops to $20–$30 per megawatt-hour, per BloombergNEF. The project leverages economies of scale, with electrolyzers at $1,000–$2,000 per kilowatt, and Germany’s robust grid minimizes losses. Technologically, Lubmin will likely deploy proton exchange membrane (PEM) or alkaline electrolyzers, consuming 50–60 kWh per kilogram at 60–70% efficiency. Challenges include boosting electrolyzer lifespan beyond 20,000–30,000 hours and managing water purification, adding $0.10–$0.20 per kilogram. Integration with 200 GW of offshore wind by 2030 ensures stable renewable input, but grid balancing systems, costing $10–$20 million, are critical for wind’s variability. Lubmin could decarbonize 100,000–200,000 tons of CO2 annually, setting a blueprint for EU hydrogen hubs and showing how subsidies can bridge economic barriers for clean hydrogen.

Now, let’s jet to the Reuters article from May 29, 2025, "Sinopec sets up $690 million hydrogen-energy-focused venture capital fund." This move by China’s state-owned oil and gas titan, Sinopec, is a blockbuster bet on hydrogen, launching a 5 billion yuan—$690 million—fund, China’s largest dedicated to the hydrogen value chain. Managed by Sinopec Private Equity Fund Management Co., with partners like Shandong New Growth Drivers Fund and Yantai Guofeng Investment, the fund targets early-stage investments in advanced materials (e.g., electrolyzer membranes), core equipment (e.g., PEM electrolyzers), and proprietary technologies for production and storage. Sinopec’s hydrogen portfolio is already formidable, with stakes in 13 hydrogen-related companies, 11 fuel cell supply centers, and 144 refueling stations across China, dwarfing the U.S.’s 60 stations. With $4.6 billion slated for investment by 2025 and a goal of 500,000 tons of renewable hydrogen capacity, Sinopec could power 5 million fuel cell electric vehicles (FCEVs) annually. The fund aims to nurture 10–20 startups, potentially valued at $100–$500 million each by 2030, per BloombergNEF projections, amplifying China’s hydrogen dominance.

Economically, the $690 million fund tackles hydrogen’s cost hurdles, particularly for electrolysis, which Sinopec aims to scale from $4–$6 per kilogram to $2–$3, per DOE and IEA data. Investments in proton-conducting membranes, costing $100–$200 per square meter, could slash electrolyzer costs by 20–30%, pushing capital expenses below $1,000 per kilowatt. Equipment investments, like high-pressure storage tanks (350–700 bar), address the $0.50–$1 per kilogram transport cost, making hydrogen competitive with SMR-derived hydrogen at $1–$2 per kilogram. China’s 144 refueling stations, each at $2–$3 million, signal infrastructure commitment, with plans for 1,000 by 2030, requiring $2–$3 billion. Technologically, Sinopec targets efficiency gains, with PEM electrolyzers aiming for 70–80% efficiency and 40–50 kWh per kilogram. Challenges include scaling rare earth catalysts, adding $50–$100 per kilowatt, and extending stack durability beyond 30,000 hours. Proprietary tech investments could yield breakthroughs like solid oxide electrolysis (SOE), using waste heat to hit 40 kWh per kilogram, or compression systems cutting storage losses by 10–15%. Sinopec’s manufacturing muscle, producing 1 GW of electrolyzer capacity annually, and state-backed funding position China to supply 10–15% of global hydrogen by 2035, decarbonizing 50–100 million tons of CO2 annually.

So, how can the U.S. challenge China and Germany to avoid being left in the hydrogen dust? The “One Big, Beautiful Bill Act” (H.R.1), passed May 22, 2025, repealing the Section 45V Clean Hydrogen Production Tax Credit, is a wake-up call to prioritize economics-driven, low-cost, low-CI hydrogen production—steam methane reforming with CCS, natural hydrogen, and methane pyrolysis—all at $1–$2 per kilogram, per DOE, IEA, and BloombergNEF. To compete, the U.S. must leverage its vast hydrocarbon infrastructure and geological resources, doubling down on SMR with CCS, which captures 90–95% of emissions and uses the 45Q credit ($85 per ton of CO2, or $0.50–$1 per kilogram) to match China’s cost-competitiveness, as seen in CF Industries’ $100–$150 million annual CCS earnings. Natural hydrogen, at $0.50–$1 per kilogram, is a U.S. trump card, with Koloma’s Midwest and Gulf Coast pilots potentially yielding 1–5 million tons by 2030 for $10–$50 million per site, undercutting Germany’s $4–$6 electrolytic hydrogen. Methane pyrolysis, producing solid carbon, avoids CO2 emissions, with Monolith Materials’ facilities generating $500–$1,000 per ton of carbon, offering a revenue stream to rival Sinopec’s innovation funding.

A strategic move is deploying natural hydrogen for Midwest ammonia production, challenging Germany’s industrial decarbonization and China’s supply chain dominance. Ammonia, consuming 1–2 million tons of hydrogen annually in Iowa, Nebraska, and Illinois, could use natural hydrogen at $0.50–$1 per kilogram to save farmers $100–$200 million yearly, cutting 5–10 million tons of CO2 and creating 1,000–2,000 jobs. The U.S. must accelerate public-private partnerships, like California’s ARCHES hub, to invest $10–$15 billion in 1,000 refueling stations by 2030, matching China’s infrastructure pace. Senate revisions to H.R.1, potentially raising 45Q to $100 per ton, could amplify SMR-CCS, while domestic manufacturing incentives, inspired by Germany’s grid integration, can counter China’s 1 GW electrolyzer output, with Nel Hydrogen’s plants creating 500–1,000 jobs each. By 2030, these methods could supply 60–70% of U.S. hydrogen demand (20 million tons), positioning the U.S. to compete globally with a lean, low-CI hydrogen economy.

Alright, that’s it for me, everyone.  If you have a second, I would really appreciate it if you could leave a good review on whatever platform you listen to. Apple podcasts, Spotify, Google, YouTube, etc. That would be a tremendous help to the show. And as always if you ever have any feedback, you are welcome to email me directly at info@thehydrogepodcast.com. So until next time, keep your eyes up and honor one another.