World Bank Lifts Ban on Nuclear Energy Funding for Developing Countries

The World Bank's board has decided to lift its longstanding ban on funding nuclear energy projects in developing countries, signaling a shift in its energy policy aimed at addressing rising electricity demand across the globe, as reported by Reuters.

This decision, announced by World Bank President Ajay Banga, marks a significant step toward diversifying the bank’s approach to energy solutions, while simultaneously aiming to meet the growing energy needs of developing nations.

Banga shared the revised strategy with the bank’s staff, emphasizing that while the board agreed on revising its stance on nuclear power, further discussions were still needed regarding the funding of natural gas production.

The bank’s decision comes after a constructive discussion with board members, but no consensus was reached regarding whether the World Bank should invest in upstream natural gas projects, and under what conditions.

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A New Path for Nuclear Energy Funding

The World Bank had halted funding for nuclear energy projects in 2013, citing concerns over safety, cost, and long-term environmental impacts.

However, with energy demands expected to soar in developing countries by 2035, the bank has recognized the need for more diverse energy options. In his memo, Banga pointed out that electricity demand in these regions is projected to more than double by 2035, requiring significantly increased investment in energy generation, grids, and storage.

The revised energy strategy will allow countries to choose from a broad mix of energy sources to meet their needs, including nuclear, solar, wind, geothermal, hydroelectric power, and, if necessary, natural gas. The bank will also focus on enhancing the lifespan of existing nuclear reactors and improving grid infrastructure.

Global Implications and Political Influence

According to Reuters, the World Bank’s shift follows US pressure, especially under the Trump administration, to include nuclear energy in its financing. Supporters argue developing countries need affordable energy for growth, while critics warn this could divert funds from renewables like solar and wind, raising environmental and safety concerns.

World Bank President Ajay Banga outlined a flexible energy approach, allowing countries to choose their mix, including renewables, nuclear, and natural gas, based on development needs. Support for natural gas remains, if aligned with national goals and not at the expense of renewables. The bank also continues backing coal emission reductions and carbon capture, while weighing nuclear’s role in sustainability.