Nuclear 3x marks the beginning of the end of the World Bank’s willful ignorance

Why a Trust Fund is the sensible next step

Like many, I’m cynical about grand collective promises coming out of climate summits, but one that dropped today seems different.

Twenty-two countries declared their intention to triple nuclear power capacity by 2050. This public statement will likely have no practical effect on the actions of any of the signatories, yet it is an aggressive assertion that nuclear power is unapologetically back in favor. The potentially more meaningful news IMO is this:

[We] Invite shareholders of the World Bank, international financial institutions, and regional development banks to encourage the inclusion of nuclear energy in their organizations’ energy lending policies as needed, and to actively support nuclear power when they have such a mandate….

I’ve written before why the World Bank should pull its head out of the sand on nuclear. Here’s why I believe today’s announcement a game-changer:

1. The taboo is now broken. This is, as far as I’m aware, the first open call for a change from leading World Bank shareholders. When I privately raised the idea of lifting the nuclear ban with several Bank board members in 2019, I was met with discouraging sighs that it could never happen. One advised me to not even mention the idea inside 1818 H St headquarters. DJ Nordquist, who represented the United States on the World Bank board 2019-21, encountered similar internal resistance, before venting her frustrations in Foreign Affairs where she makes a compelling case for Why the World Bank Needs to Get in the Nuclear Game.

2. Proponent countries are diverse. The US, Canada, UK, and France are all longtime supporters of nuclear power, but the 3x signatories also include aspirants like Mongolia, Morocco, and Ghana. My organization and our friends at Third Way track which countries are taking concrete steps (not just making announcements) to prepare for nuclear power. We find about 50 countries are ready today or likely will be by 2030. 

Source: Energy for Growth Hub & Third Way

3. Opponents of nuclear energy are very few (and not at all diverse). The resistance to nuclear power inside the World Bank is partly bureaucratic inertia – it’s a major effort to change a policy for an organization owned by 189 governments. But it mostly comes from a tiny set of hardcore ideological objectors. My colleague Jake Kincer (now at Clearpath 😢) and I estimate that at least 100 Bank shareholders are visibly pro-nuclear, with just 8 against. These are 7 rich European nations plus Australia. The tyranny of this tiny minority should be coming to an end.

4. Cost of capital is exactly what the Bank is supposed to tackle. The biggest obstacle to nuclear power is not Germany’s emotional discomfort, but rising interest rates. A feature of nuclear power plants is that they can run for many decades yet financing is relatively short term (as Bill Budinger and Paul Bauman explain in Is Nuclear Energy Too Expensive?). High upfront costs for a plant expected to last 50 or 80 years make projects especially sensitive to borrowing rates. The cancellation of one of the most promising US small modular reactor pilots last month was largely because of rising costs for steel and capital. If interest rates are making it hard in the US, they’re even more of a problem in emerging markets where rates are always higher. But guess what organization was built for the express purpose of reducing the cost of long-term capital for emerging markets? The World Bank.

5. Smart infrastructure decisions are part of the Bank's mandate too. In addition to those 50 countries already set on a nuclear future, another 50-ish have taken some tentative steps to explore the technology and will be making critical decisions soon. Why wouldn’t the World Bank – which sticks its nose into every other corner of public finance and infrastructure planning – help its clients make rational evidence-based decisions about nuclear?

6. Other funders will follow. The regional development banks usually copy World Bank policies, so once the Band-Aid is ripped off, I’d expect ripple effects across a wide set of financial institutions – which could eventually further help cost-share. 

A quick first step: a Nuclear Technology Trust Fund. 

Besides cost, the other major objection to nuclear power seems to be timing. Most emerging markets will likely be buying smaller advanced reactors because they are cheaper, more flexible, and adaptable to different circumstances, like remote mining operations. But the first commercial SMRs have not yet hit the market, so I’ve sometimes heard people argue that it's too soon for the World Bank to pay attention. Not at all. Decisions are being made today about infrastructure for 2030 and beyond, so it’s exactly the right time.

That’s why the World Bank’s very first step should be building its own expertise. If the board or management dither, the US and other nuclear allies could establish a Nuclear Technology Trust Fund. One of the most ridiculous things I’ve ever read in a World Bank strategy was the explicit refusal (see footnote on page 14) to even learn about a technology that provides nearly one-third of the world’s clean power. The Trust Fund could support creating an internal technical team to understand the technology options, financial analysts to model costs, and enable the Bank to provide input for infrastructure planning with client governments. Lending could come later. Rich Powell of ClearPath called for just such a Trust Fund in recent congressional testimony. This could be done almost immediately with a modest financial contribution (say $10m from the US plus another $20m from others), plus seconding some technical staff. 

These 22 countries should be applauded for shedding their reticence and standing up for nuclear power. Even if new loans from the World Bank might be years away, the agency can start right away by just getting up to speed.

Dream Studio: a world in the future where clean nuclear power is abundant