Should the World Bank get into nuclear power? (I think so.)

Why the riskier move may be continuing to pretend nuclear power doesn't exist.

I promised this Substack wouldn’t be boring or shy away from controversy, so why not leap right into the raging 🔥?

Nuclear power. It’s taboo at the World Bank. The agency made one loan for a nuclear power plant to Italy way back in 1959 and has been completely out of it ever since. Among its ~16,000 employees, not one has expertise in nuclear technology. Here’s the very explicit position per the World Bank Group’s latest energy strategy (PDF, page 14):

This strikes me as remarkable for multiple reasons:

1. Poor responsiveness to its clients. The Bank is typically deeply involved in all kinds of infrastructure planning in most of the 136 of the world’s low or middle-income countries. Willfully excluding — ex ante without any analysis of an individual country’s options — an energy source that provides ~10% of global electricity (and nearly 30% of the world’s low carbon power) seems negligent.

2. Behind the demand curve. Many of the Bank’s clients already operate nuclear plants or are taking active steps to build civilian nuclear programs. My colleagues at the Energy for Growth Hub teamed up with Third Way to track every country’s ‘nuclear readiness’ and created this handy interactive map. We found a diverse and growing set of interested markets:

   • At least 30 countries have civil nuclear energy programs today.

   • At least 19 more have taken concrete steps to be ready in the 2030s. 

   • A further 40 countries could be ready by 2050.

3. Behind the technology supply curve. Fukushima spooked a lot of people. But newer smaller, safer (and likely cheaper) advanced designs, like prefabricated small modular reactors and microreactors, will soon be hitting the market. Russia’s state-owned Rosatum is already aggressively selling their big & small models. So even if widespread deployment might be a decade or more away, the lead time is long and investment decisions are being made soon, so there’s no time to waste. 

4. FOMO on climate. The Bank is desperately trying to reposition itself as a climate finance leader. Most models for global net zero power systems expect nuclear to play a significant and growing role. Why the Bank would choose to sit entirely on the sidelines is a little baffling.

5. Intentional ignorance. Nuclear power exists. It’s happening. Deliberately insisting you will never build internal capacity on a very real infrastructure technology is quite a policy for the self-proclaimed “knowledge bank.” 

The open secret is that a handful of (mostly northern European) shareholders oppose nuclear power on ideological grounds. They’ll likely fight to the death to keep the current policy. But as the market develops, we may see more pressure on the Bank to at least consider nuclear power.

In “The World Needs More Nuclear Power,” former US rep to the Bank DJ Nordquist and former NRC Commissioner Jeffrey Merrifield argue cogently in Foreign Affairs:

[The World Bank’s] self-imposed policy means that energy-hungry, developing countries have had to turn to authoritarian regimes for the financing and technology needed to build nuclear power plants. It is time for the bank to reverse this outdated, counterproductive policy, especially given its focus on climate change mitigation. Countries should no longer be denied one of the key tools needed to solve the ambitious math of net zero.

More explicit pressure may come from the United States Congress. In 2021, Republican Congressman Patrick McHenry of North Carolina introduced the International Nuclear Energy Financing Act to force the US Treasury to press the World Bank on nuclear power. McHenry now chairs the House Financial Services Committee, which controls US contributions to the World Bank. Ahem. 

My main hesitation has nothing to do with the usual concerns about nuclear waste or safety. (The Bank could even help to raise standards, especially in countries working with suppliers less concerned with environmental impact 🇷🇺🇨🇳.) My big worry is that World Bank involvement could wind up getting in the way because of its notorious bureaucracy and multiple choke points. 

For many reasons – responding to clients’ energy needs, scaling low carbon energy, and to get ahead of the curve –  the Bank should IMO at least build internal capacity to understand the new technologies, trends, and options. Why not at least start with… learning?

Big bureaucracies are inherently risk averse. But for the World Bank, the riskier move may be continuing to pretend nuclear power doesn't exist.