The World Bank is making a dramatic policy shift by re-entering the nuclear energy sector “for the first time in decades,” as part of broader efforts to meet the soaring electricity demands of developing nations, President Ajay Banga announced on Wednesday.
In a staff-wide memo, Banga stated that the World Bank will now collaborate more closely with the International Atomic Energy Agency (IAEA) to bolster regulatory support and advise on non-proliferation safeguards, marking a notable departure from its long-standing stance on nuclear power.
“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 said in the message.
Doubling Demand Spurs Energy Policy Rethink
The move comes amid a global shift in development finance priorities, with electricity demand in emerging economies projected to more than double by 2035. To meet that challenge, Banga noted that annual investments in energy generation, grid infrastructure, and storage must grow from $280 billion today to roughly $630 billion.
As part of this realignment, the Bank intends to support countries with existing nuclear infrastructure by helping to extend the life of aging reactors and investing in grid upgrades and supporting facilities.
Additionally, the World Bank is positioning itself to accelerate the development and potential deployment of Small Modular Reactors (SMRs) a new generation of nuclear technology viewed as more adaptable and cost-efficient for smaller economies.
From Coal to Clean Energy—With Flexibility
Beyond nuclear, the World Bank will continue backing efforts to retire or repurpose coal-fired plants, and to advance carbon capture technologies for industrial and power sector applications.
This broader shift reflects Banga’s leadership push since taking over in 2023, aiming to make the Bank more responsive to the energy transition needs of the Global South, while remaining agnostic on the technologies countries choose to adopt.
“We will support dependable energy technologies and infrastructure not just climate finance targets that may distort local realities,” Banga emphasized.
US Applauds Policy Change, But Gas Remains Contentious
The United States, the Bank’s largest shareholder, has publicly supported this return to nuclear financing. During the IMF/World Bank Spring Meetings in April, U.S. Treasury Secretary Scott Bessent praised the policy shift, arguing that the Bank should focus on practical solutions to energy access rather than what he termed “distortionary climate finance targets.”
This includes the possibility of financing gas and other fossil fuel-based energy systems a move likely to stir debate among climate advocates and some board members.
However, Banga clarified that while discussions have begun, the World Bank has not yet reached a consensus on whether or how to engage in upstream gas investments, signaling that internal divisions still exist.
A Turning Point for Global Development Finance
The World Bank’s new openness to nuclear energy reflects a significant evolution in its energy strategy, driven by mounting pressure to help countries balance development goals with decarbonization targets.
As global energy security concerns rise and infrastructure needs in the developing world deepen, the Bank’s decision could mark a watershed moment in how multilateral institutions approach energy equity, technology neutrality, and climate resilience.
