World Bank’s Historic Reversal on Nuclear Energy Financing Signals Global Energy Shift

 In a groundbreaking policy shift, the World Bank announced on June 11, 2025, that it would lift its decades-long prohibition on financing nuclear power projects, a decision poised to reshape energy landscapes in developing nations. President Ajay Banga, addressing staff via an internal email from the bank’s Washington, D.C., headquarters, outlined a strategic pivot to support nuclear energy, including extending the operational life of existing reactors, upgrading transmission grids, and fostering new nuclear infrastructure.

The move, endorsed by the bank’s board and developed in partnership with the International Atomic Energy Agency (IAEA) for stringent non-proliferation safeguards, responds to the escalating electricity demands of emerging economies, projected to double by 2035. This marks the first time since 1959 that the World Bank will fund nuclear projects, reversing a 2013 ban rooted in safety and cost concerns, and reflects a global renaissance in nuclear power as a low-carbon alternative to fossil fuels.

The decision comes amid mounting pressure from major shareholders, particularly the United States, which holds a 16.5% voting share and sees nuclear energy as critical for industrializing nations without exacerbating climate change. U.S. Treasury Secretary Scott Bessent hailed the shift as a “revolutionary step,” emphasizing its potential to unlock markets for American firms like Westinghouse, which specializes in small modular reactors (SMRs). Germany, under its new Christian Democratic Union-led government, has softened its post-Fukushima anti-nuclear stance, supporting SMRs as a bridge to net-zero emissions. Developing nations like Nigeria, Kenya, and Indonesia, where electricity access remains below 60% in rural areas, stand to benefit, with the bank estimating a need for $630 billion annually in energy investments, up from $280 billion. Banga’s vision, shaped since his 2023 appointment, prioritizes affordability and sustainability, with nuclear projects expected to complement renewables like solar and wind.

However, the policy has sparked debate. African environmental groups, such as Nigeria’s Green Alliance, expressed concerns about safety risks in countries with limited nuclear regulatory expertise, citing incidents like the 1986 Chernobyl disaster. Banga countered that IAEA collaboration ensures robust oversight, with pilot projects requiring independent audits. The World Resources Institute praised the move, noting that nuclear power could reduce coal dependency, which accounts for 40% of global CO2 emissions. The policy also positions China, a leader in SMR technology, to compete for contracts, potentially intensifying U.S.-China rivalry. Discussions on upstream gas financing remain stalled, but the nuclear shift could mobilize private capital, with JPMorgan estimating a $1 trillion market by 2040. The announcement, covered extensively by Reuters and The New York Times, underscores the World Bank’s evolving role in balancing development with climate goals, as nations like Nigeria explore nuclear feasibility studies to meet growing urban demands.