The World Bank has lifted its longstanding ban on financing nuclear energy projects, a major policy shift aimed at addressing the rapidly growing electricity needs of developing countries.
World Bank President Ajay Banga announced the change in an internal memo on Wednesday, stating that the institution will now re-enter the nuclear energy space “for the first time in decades.” The decision follows a board meeting and comes amid projections that electricity demand in developing nations will more than double by 2035.
“To meet this demand, annual investment in energy generation, grids, and storage must rise from $280 billion to $630 billion,” Banga noted in the memo.
He said the bank will collaborate closely with the International Atomic Energy Agency (IAEA) to ensure compliance with non-proliferation safeguards and strengthen regulatory frameworks in countries interested in adopting nuclear technology.
Support for Existing and New Technologies
According to Banga, the bank will support the extension of the life of existing nuclear reactors and facilitate grid upgrades necessary for their continued use. It also plans to explore the feasibility and scalability of Small Modular Reactors (SMRs), which offer a more flexible and potentially safer alternative to traditional nuclear plants.
Banga framed the policy change as part of a broader push to offer countries a wider range of options for meeting energy needs while aligning with their development goals.
“The goal is to help countries deliver the energy their people need, while giving them the flexibility to choose the path that best fits their development ambitions,” he said.
Complementary Climate and Energy Goals
The World Bank will continue supporting the retirement or repurposing of coal-fired plants and financing carbon capture for industrial and power sectors. Improving electricity grid performance also remains a key focus.
The announcement aligns with recent remarks by U.S. Treasury Secretary Scott Bessent, who urged the World Bank to prioritise reliable energy technologies over what he described as “distortionary climate finance targets.” The United States, the bank’s largest shareholder, has been a vocal advocate for reintroducing nuclear energy into the World Bank’s financing portfolio.
Gas Investments Still Under Review
However, Banga noted that the board has not yet reached a consensus on whether the World Bank should support upstream gas investments, leaving future financing for gas projects uncertain.
The lifting of the nuclear energy financing ban signals a significant evolution in the bank’s energy policy, as it balances climate action with the urgent need to expand energy access in emerging economies.
