The World Bank has officially announced its return to financing nuclear energy initiatives, a major policy change that comes after decades of withdrawal from the sector.
This renewed interest in nuclear power is driven by the growing electricity needs of developing countries and forms part of the Bank’s broader strategy to help these nations secure reliable and sustainable energy sources.
Ajay Banga, President of the World Bank, communicated the decision in a memo to staff members on Wednesday, confirming the institution’s intent to re-engage with nuclear energy development in a structured and responsible manner.
According to him, the Bank will be working in close partnership with the International Atomic Energy Agency (IAEA), with a strong emphasis on enhancing the institution’s capability to provide guidance on nuclear non-proliferation safeguards and comprehensive regulatory systems.
Banga explained that this step is necessary in light of the surging electricity demand across developing countries, which is projected to more than double by the year 2035.
The internal memo, accessed by AFP, revealed that meeting this demand will require an increase in annual investments in electricity generation, transmission networks, and energy storage infrastructure—from the current $280 billion to around $630 billion.
In his message, Banga emphasized that the World Bank would contribute to the extension of operational life for existing nuclear reactors in countries where they are already in use. He added that the Bank would also be involved in efforts to upgrade power grids and related infrastructure, ensuring these systems can accommodate the evolving needs of modern energy delivery.
Banga noted that one of the critical areas the World Bank intends to focus on is the advancement of Small Modular Reactors (SMRs). These smaller and potentially more cost-effective nuclear units are increasingly being considered a viable energy option for a broader range of countries. The Bank’s involvement aims to accelerate the adoption of SMRs as an accessible and practical energy solution.
Since assuming leadership of the World Bank in 2023, Banga has consistently pushed for a revision of the institution’s energy policy. This recent communication followed a board meeting held a day earlier, where such energy reforms were a central topic.
He stated that the main objective is to enable countries to provide sufficient energy for their populations while maintaining the autonomy to choose approaches that align with their unique development goals.
While the World Bank aims to support the enhancement of power grids, Banga assured that the organization will maintain its existing role in assisting with the phase-out or repurposing of coal-fired power plants. Additionally, the Bank will continue to support the deployment of carbon capture technologies, particularly in industrial and power sectors where emissions remain high.
During the International Monetary Fund and World Bank spring meetings held in April, U.S. Treasury Secretary Scott Bessent emphasized the need for the World Bank to optimize its resources by helping developing nations improve energy access through proven technologies. He suggested that dependable power solutions should take precedence over what he called “distortionary climate finance targets.”
Bessent also commended the World Bank’s movement toward lifting previous limitations on supporting nuclear energy projects, describing the shift as a more practical response to energy challenges faced by developing economies.
While the World Bank’s re-engagement with nuclear energy is now official, Banga clarified that discussions are still ongoing at the board level regarding whether the Bank should become involved in upstream natural gas projects. He indicated that there is still no consensus on the conditions under which such support would be considered appropriate.
The United States, which holds the largest share of voting power in the World Bank, has been one of the most vocal proponents of nuclear energy financing, urging the institution to reconsider its long-standing ban. This recent policy shift signals that such appeals are now gaining traction within the Bank’s leadership and decision-making processes.
As the Bank embarks on this renewed direction, Banga reiterated that its energy policy must be grounded in flexibility, pragmatism, and a commitment to helping countries meet their development objectives in a sustainable way.
What you should know
The World Bank’s re-entry into nuclear energy financing marks a strategic departure from decades of caution. It aims to address the doubling electricity demand in developing nations by supporting existing reactors, infrastructure upgrades, and emerging technologies like Small Modular Reactors.
This shift reflects growing global pressure to adopt reliable, scalable energy solutions while still balancing safety, sovereignty, and sustainability.
