Recent black swan events [rare, unforeseen, and impactful occurrences], ranging from COVID-19 to war in Ukraine, and a growing focus on sustainability has transformed the global business and energy landscape. Now more than ever, investors, consumers, and governments are paying significantly more attention and scrutiny on how companies can balance energy sustainability, reliability, and affordability.

My name is William Zhang, and I am a member of Oliver Wyman’s Energy and Natural Resources Practice in New York. My parents emigrated to the United States from China in the 1990s. As a product of two worlds, I am drawn to global affairs, with sustainability being a key interest of mine. This interest, combined with my training in analytics and logical reasoning as a math student at NYU, motivated and enabled me to help companies address the complex issues of navigating the energy transition.

Over the course of my tenure, I am proud to have helped some of the world's leading energy companies facilitate global sustainability strategies, including assisting airlines optimize long-term fuel supply and consumption, and devising novel biofuels growth strategy. The energy transition is underway, and increasing corporate and investor focus on sustainability is offering the energy industry an exciting opportunity for innovation and change.

Legislative actions, like the United States Inflation Reduction Act, have boosted renewable energy investments. By 2030, annual investments in renewables are expected to exceed $100 billion. A similar wave is sweeping across Europe, as the European Union debates legislations to boost domestic renewable energy production. The renewable energy sector is poised for rapid growth and deserves attention and investment from energy companies.

However, geopolitical issues have rekindled concerns about energy security and supply resiliency. Global companies now face a challenge of balancing efficient supply chains with a need for diversification and resiliency. Finally, as the world has emerged from the COVID-19 pandemic and is grappling with stubborn inflation, rising energy prices have become a pressing concern. Governments are taking executive actions and employing fiscal tools to alleviate the burden on consumers, such as the US tapping into its Strategic Petroleum Reserve, the UK levying an energy windfall profit tax, Germany enacting consumer price breaks, and more increasingly, energy companies face both incentives and scrutiny from government to reduce costs and enhance affordability.

Striking that right balance among traditional suppliers and future portfolio is essential for long-term energy affordability. The energy trilemma paints a complex landscape that seems confusing and difficult to navigate. Government incentives signal now is the right time to allocate capital into renewable projects, but these projects may also require building up inefficient supply chains to withstand future shocks, all while companies are being incentivized to expand traditional energy output and accelerate decarbonization efforts.

Managing these confusing signals will be critical for energy companies, as old models of prioritizing affordability to generate profits and returns is no longer adequate for this changing world. The ramification for not finding the right balance among the energy trilemma means more than just lost opportunities and unprofitable operations. It means companies could be phased out in the new generation of energy development and unable to deal with, or even survive, black swan events and political risk.

On the flipside, companies that invest its time and resources to find the right balance will gain a competitive edge to better position themselves for the energy future. The individual elements within the energy trilemma, seemingly contradictory to each other, can be harnessed into a synergetic channel. Exploring traditional energy supplies can fund investment into renewables. Tax benefits and incentives for clean energy can help cushion the cost of building resilient supply chains. And diversified supply chains might open new markets/avenues for growth.

The energy industry has always thrived on innovation and adaptability. And the energy trilemma is no different than the challenges the energy industry has overcome before. The key lies in how companies seize these opportunities and better position themselves for the future.

Together, we can navigate the energy trilemma and embrace a more sustainable and prosperous future.

I'm William Zhang, and this has been my take on balancing the energy trilemma.

This transcript has been edited for clarity