...AND CHEAPER...:

The biggest producer of electrolyzers, Norway's Nel ASA, can make a modest 80 megawatts per year. To put the world on a path to zero emissions, we'll need to install two million megawatts or more.

The fact that such an expansive vision is seen as remotely viable is a tribute to the way renewables and lithium-ion batteries have transformed the energy industry over the past decade.

In the mid-2000s, even an advocate of climate action like British economist Nicholas Stern didn't think wind and solar could compete economically with fossil fuels until the 2030s. Things turned out very differently. Since 2009, the cost of unsubsidized solar power in the U.S. has fallen 90% and wind is down 70%, notes Lazard Ltd. Battery prices have slumped 87% over a similar period, according to BloombergNEF. Coal is already in retreat from the power sector, and many of the world's biggest independent oil companies think petroleum demand is at or near its peak.

If green hydrogen can achieve renewable power-style cost declines from its current pricing of around $3 to $8 a kilogram, it stands a good chance of competing with gray hydrogen, which costs as little as $1. The risk, though, is that the forecast reductions aren't achieved. If a botched deployment or technical problems result in more modest economies of scale, the world will be left with a legacy of uneconomic hydrogen-production plants. On top of that, billions that could have been spent on other decarbonization technologies will have been wasted.

Renewables have managed to undercut conventional power generation over the past decade

Which of those two futures we face will be determined by Wright's Law, a hypothesis about manufacturing dating from the early years of the aircraft industry. It states that with every doubling of cumulative output, the cost of technology tends to fall by a constant percentage. Factories get better at finding efficiencies; increased demand drives economies of scale; and larger volumes encourage suppliers to produce raw materials more cheaply. (The better-known Moore's Law, which predicted drastic declines in the cost of computing power, is best understood as a special case of Wright's Law.)

The cost-decline percentage, known as the learning rate, seems to explain why nascent renewable technologies can get so cheap so quickly. The learning rate for solar modules is a blistering 28.5%, according to BloombergNEF, meaning that an eightfold increase in installations will reduce costs by nearly two-thirds. That fall in prices then triggers more demand, encouraging further solar installations and reducing costs again in a virtuous circle. Fossil technologies can't compete with that advantage, because their largest cost is typically the fuel itself, where prices show no long-lasting downward trend.

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