World Bank nuclear ban, RIP

It happened yesterday... but almost didn't

The New York Times lede says it all:

The world’s largest and most influential development bank said on Wednesday it would lift its longstanding ban on funding nuclear power projects.

The decision by the board of the World Bank could have profound implications for the ability of developing countries to industrialize without burning planet-warming fuels such as coal and oil.

Here’s the full note that World Bank President Ajay Banga sent to all staff yesterday.

Embargo 414pm WBG Energy

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The relevant extract is:

What’s new is that, for the first time in decades, the World Bank Group will begin to reenter the nuclear energy space. We will advance this work in close partnership with the IAEA— building capacity and strengthening our ability to advise on non-proliferation safeguards, safety, security, and regulatory frameworks.

Together with the IAEA and other partners, we will support efforts to extend the life of existing reactors in countries that already have them, and help support grid upgrades and related infrastructure. We will also work to accelerate the potential of Small Modular Reactors—so they can become a viable option for more countries over time.

It almost didn’t happen

This policy change is personally satisfying. I started working on the World Bank ban back in 2018. It just struck me as dumb to ex ante prohibit an energy technology that was already widely in use, could deliver firm clean power at scale, and whose technology was evolving in exciting ways. The ban was utterly at odds with the mission to promote global growth and boost low carbon energy. The World Bank seemed stuck in the past.

I started talking with different World Bank shareholders about nuclear. Our first private memo on this issue started circulating in Oct 2019.

WBG Nuclear Analytical Team Proposal

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The reaction was Don’t bother. The Bank will never change.

I know this sounds ridiculous, but when we started, even talking about nuclear was considered taboo inside the World Bank. When a staffer at its private sector IFC wanted to meet me to discuss it, he had to go off campus and use his personal email. A senior advisor in one of the board member’s offices advised me to “be careful” who I raised the issue with. I even received a direct warning from a senior Bank official, passed through a friend, that I would be stopped in trying to push for an end to the ban. (👋🏽 You know who you are.) I know this all sounds nuts, but that was what we were up against.

Instead of shying away, we built a coalition of allies all pushing for openness to the technology. Lots of people helped, but I’ll especially flag friends at ClearPath and Third Way, plus a growing army of Hill staff. A big moment was the release of The World Needs More Nuclear Power: Why the World Bank Needs to Get in the Game in Foreign Affairs by DJ Nordquist and Jeff Merrifield. Nordquist had been the US rep to the World Bank under Trump 1.0 so her voice carried weight. On the inside, she had hit many of the same barriers we encountered. Nordquist managed to arrange an informal briefing for board members on new nuclear technology – a major breakthrough in itself – but had not gotten much traction on actually shifting Bank policy.

So the nuclear door had been cracked, but it really took the White House to blow it open. The Trump administration made no secret of its wishes to end the nuclear ban. I understand the final negotiations in yesterday’s board meeting were tough, especially since the US wants looser restrictions on all technologies. Banga’s note hints at it:

We don’t yet have agreement within our Board on whether the World Bank Group should engage in upstream gas—and if so, under what circumstances. This will require further discussion.

Kudos to Banga for threading the policy needle between the US and the Europeans. More negotiations are underway on gas, but the new nuclear policy is settled. This is a huge win for Banga — and for the world.

End of the ban means faster deployment and fairer export markets

The World Bank actually had two bans in place: (a) an energy policy that barred itself from building any expertise on nuclear technology that could be used to advise borrowing countries and (b) an explicit prohibition on investing in nuclear technology by its private sector lending arm, the IFC. Both of those should now be gone.

By lifting the policy ban(s), the Bank can now start to assist countries in deciding whether nuclear is appropriate for them, which models are best, how to buy them competitively, and what steps need to be taken to get ready.

I’m especially hoping that World Bank involvement will bring the nuclear market out from behind the curtain. Right now, countries that want to consider nuclear power have little choice but to turn to Russia and China for deals that are negotiated in back rooms and include multi-decade fuel lockups plus who-knows-what-else. Far better would be for open procurement in a competitive market. That’s where the Bank can really help.

Removing nuclear from the investment ban – it is literally called the IFC Exclusion List – will also open the door to other agencies that copy that list. Daniel Johansson and I counted at least 21 others. Once these organizations change too, then nuclear projects could be financed by a consortium of public and private investors. This is how big stuff gets built.

Wait, but isn’t nuclear too expensive?

I sometimes hear this from critics. A German engineer (at another international agency, not the World Bank) emailed me just a few days ago to explain that high cost is the reason to keep the ban. This is odd.

When solar was very expensive, the response was to lean in with support, subsidies, and market-building to drive down the costs. A bigger market meant more innovation and economies of scale. This is what the World Bank and others should do with nuclear as well. Banga’s note on small modular reactors (SMRs) suggests they have this in mind too.

A better criticism I heard was that SMRs – the next gen models that will (hopefully) be cheaper and more flexible – don’t actually exist yet. Sorta true. Russia and China have early operational models while multiple designs by Western firms are under active construction. FOAK is always crazy expensive. How can we get to the 10th (or 100th) SMR as quickly as possible? The World Bank can help.

Isn’t nuclear only for rich countries?

I hear this too. It’s just wrong. As my colleague Jessica Lovering wrote, India, Pakistan, and China all started nuclear programs when they were dirt poor. Poverty is no excuse for exclusion from technology — rather the opposite.

More importantly, countries can make their own choices. The NYTimes article quotes my colleague Ishmael Ackah, now an advisor to Ghana’s Energy Minister:

“Things have been slow for us because of global politics around nuclear, but we have been preparing, setting up an institutional structure, identifying sites…. We want a 24-hour economy, industrial production to be happening day and night.”

Ghana is not alone Many countries across Asia, Africa, and the Middle East are taking active concrete steps to prepare for importing nuclear technology. With Hamna Tariq and Daniel Johansson, we summarize who in Africa is ready for nuclear power. Here’s the answer:

We can also answer this for South Asia and Southeast Asia .

What’s next?

Lifting the bans is just the beginning. This policy change only matters if it leads to more clean power for fast-growing economies. In the near term:

1. The World Bank must build an expert team ASAP. Fortunately, the US Congress is already ahead of the game and has introduced legislation supporting the creation of a trust fund to help. The trust fund – an idea we floated back in 2020 – is how to get things done fast inside the World Bank.

2. Other agencies should lift their bans too. I would especially keep an eye on the Asian Development Bank. It is much less beholden to the lingering anti-nuclear crowd plus its borrowers are clamoring for change. And if you care about coal plant replacement, that’s the region where nuclear could help most.

3. The US needs to move faster to deploy its first SMRs. Industry has to build its first new commercial reactors soon, which means the government has to simultaneously step up and get out of the way. The recent White House executive orders are a good signal of intent, but budget cuts at NRC and DOE might work in the opposite direction. No one said this would be easy.

So, let’s celebrate the win. But let’s get to work.