In a major policy shift, the World Bank is returning to nuclear energy financing for the first time in decades, as it ramps up efforts to meet the surging electricity demands of developing countries. The move, confirmed by World Bank President Ajay Banga in a message to staff on Wednesday, signals a new era in the institution’s approach to global energy development.
The bank will collaborate closely with the International Atomic Energy Agency (IAEA), strengthening its capacity to offer guidance on nuclear safety, non-proliferation, and regulatory best practices. This new direction aligns with the rapidly growing energy needs across emerging markets, where electricity demand is expected to more than double by 2035.
“To meet this demand, annual investment in energy generation, transmission, and storage must rise significantly from $280 billion today to around $630 billion,” Banga said in the internal memo.
Banga outlined a broad energy strategy that includes support for extending the operational lifespan of existing nuclear reactors in countries already using nuclear power. The bank will also help fund upgrades to power grids and associated infrastructure.
In a nod to emerging technologies, the World Bank is preparing to help accelerate the deployment of Small Modular Reactors (SMRs) compact, scalable nuclear units seen as more adaptable and potentially more affordable than traditional nuclear plants. These reactors could offer new opportunities for countries previously unable to consider nuclear power due to high capital costs or technical constraints.
“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,” Banga stated.
The bank’s revised stance on nuclear comes amid a broader rethinking of its energy policy, aimed at supporting reliable and flexible power generation options. In addition to nuclear, the institution will continue backing efforts to decommission or repurpose coal-fired plants and invest in carbon capture solutions for heavy industries and electricity producers.
While the World Bank is opening the door to more diverse energy technologies, Banga acknowledged that its board has not yet reached consensus on whether to finance upstream natural gas projects a contentious topic as stakeholders debate the role of fossil fuels in the energy transition.
The policy evolution follows mounting pressure from some of the bank’s largest shareholders, particularly the United States, to reassess past restrictions on nuclear energy funding. In April, U.S. Treasury Secretary Scott Bessent praised the bank’s willingness to re-evaluate its approach, arguing that it should prioritize “dependable technologies” over rigid climate finance targets.
That includes potentially embracing cleaner fossil fuel options such as natural gas to bridge short-term energy gaps.
As part of his reform agenda since taking office in 2023, Banga has advocated for a more pragmatic and inclusive approach to energy investment one that reflects the diverse needs and development stages of low- and middle-income countries.
The World Bank’s return to the nuclear conversation marks a notable shift in global development finance. It also underscores growing recognition that a one-size-fits-all model won’t deliver the scale or reliability of energy access needed in the years ahead.
