World Bank and IAEA backing new nuclear for development
The World Bank has taken its first step since ending its ban on funding nuclear energy projects by partnering with the International Atomic Energy Agency to support countries that choose to include nuclear energy in their development strategies.
Under the partnership agreement the two institutions will build capacity, strengthen safeguards and share technical expertise and help the World Bank "deepen its internal knowledge across areas such as energy planning, regulatory frameworks, refurbishment of existing reactors, and the deployment of new technologies like small modular reactors".
Nuclear power was approved by the World Bank Board two weeks ago "as part of a broader approach to electrification - one that prioritises accessibility, affordability, and reliability, delivered in a way that manages emissions responsibly. 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, national context, and nationally determined contributions."
World Bank President Ajay Banga and International Atomic Energy Agency Director General Rafael Mariano Grossi, signed the agreement at an event in Paris.
Banga highlighted that the average person in high-income countries was using about 50 MWh of electricity per year, while in Africa the figure was 4 MWh. He said the gap had widened in recent years making it "far more challenging for the growth and development of our world in a fair way", with electricity demand in developing countries projected to more than double by 2035.
"Meeting that demand will require annual investment in generation, in grids, in storage to rise from USD280 billion today anually to roughly USD630 billion. That scale is what drives our effort to connect 300 million people in Africa to electricity by 2030 with the African Development Bank. It's why we developed a very clear path forward on delivering electricity as a driver of development."
Banga added that its approach "prioritises accessibility, affordability and reliability delivered in a way that manages emissions in a responsible way - and 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, their national context ... we believe access to electricity is a fundamental human right and the foundation of development - jobs require electricity, as do health systems, education, clean water, public safety and so much more".
Dependable long-term baseload is required for development, he said, and "what is new is that for the first time in decades, the World Bank Group will begin to re-enter the nuclear energy space ... it's a significant step and one that we take with care, but importantly with partnership and with purpose",
The three areas prioritised are firstly, to build capacity and strengthen the World Bank's ability to advise on non-proliferation safeguards, on safety, on security and on regulatory frameworks. The second area is to look at extending the life of existing reactors, "one of the most cost-efficient ways" to produce electricity, and thirdly to see if "we do something together to accelerate the potential of small modular reactors so over a period of time they can become a more viable option for more countries".
Banga said: "The World Bank Group cannot do this alone, and that is why the partnership with the IAEA is critical to us. It marks a very tangible first step in our return to nuclear energy. The IAEA will help us build internal capacity across a wide range of topics, energy planning, project life cycle, fuel management, waste disposal and the technical infrastructure required for success. That coordinated approach will deepen our understanding of where nuclear energy can play a responsible role and give our clients access to the guidance and the support they need to pursue that path if they choose to take it."
IAEA Director General Grossi referred to the current global events and said that this agreement showed that "when we work together, when we have a good idea, when we have a determination to do something and to change things, this is possible".
He praised the work of the World Bank president, saying that "for many, many years a narrative was saying that this was not possible and for many, many years, and ... the nuclear industry, the guys really doing this stuff, were hitting a wall that was saying that investing in nuclear was not something for international finance institutions".
Grossi said that nothing could change without the World Bank. "It's as simple as that. In my endless rounds of conversations in many parts of the world when I was approaching banks and regional banks and financing people" they would refer to the World Bank position. Grossi said that the policy change followed a year of working together, and he also said he wanted to "say thanks to the industry" saying that they had worked closely with the IAEA.
He concluded by saying the "one big problem we had was the lack of finance - the fact that many, many clients in the Global South in developing countries, even in industrialised economies, need some financing support. And now they know they can come to the World Bank, they can talk to the World Bank. They can explain what they want to do in different areas, starting with life extensions, but also doing feasibility studies ... look at concrete projects, see the feasibility of them and work together".
"I think this is a very important day," added Grossi, who said that he had already had calls from some regional development banks looking to find out more about the agreement with the World Bank.
The agreement was welcomed by Sama Bilbao y León, Director General of World Nuclear Association. Speaking at the association's first Financing Nuclear Briefing taking place in London she said it was "a momentous shift for the World Bank’s lending policy, that comes after years of engagement on the sustainability of nuclear energy. We know access to finance is essential for many newcomer countries and this broad coalition is crucial to expanding nuclear capacity for all. It is also crucial to continue to engage with the nuclear industry who will be responsible for delivering the projects with speed and scale." She added that the association, on behalf of the global nuclear industry, had worked with the World Bank for some time "and is ready for further partnership to help build their knowledge of the industry".
Background
The World Bank Group, whose largest shareholder is the USA at 17%, is a multilateral lending organisation whose mission "is to end extreme poverty and boost shared prosperity on a livable planet. This is threatened by multiple, intertwined crises. Time is of the essence". In 2024 the World Bank Group says it facilitated USD117.5 billion "in loans, grants, equity investments and guarantees to partner countries and private businesses".
Although some multinational development banks have provided lending for decommissioning or upgrades to existing nuclear plants, they do not contribute to the financing of new-build projects - the World Bank's only loan for new nuclear capacity was USD40 million in 1959 for Italy's first nuclear power plant.
The pledge to aim for a tripling of nuclear energy capacity, originally unveiled at COP28 and backed by more than 30 countries, included inviting "shareholders of the World Bank, international financial institutions, and regional development banks to encourage the inclusion of nuclear energy in their organisations’ energy lending policies as needed, and to actively support nuclear power when they have such a mandate, and encourage regional bodies that have the mandate to do so to consider providing financial support to nuclear energy".
At the moment there are about 440 nuclear power reactors operating in 31 countries with at least 70 power reactors under construction. The IAEA says there are about 30 countries considering, or embarking on, nuclear power, with about two-thirds of them in the developing world and financing remains a major hurdle for many.
