The World Bank has lifted its six-decade ban on financing nuclear energy projects, signing a formal cooperation agreement with the International Atomic Energy Agency (IAEA) aimed at supporting developing economies’ access to reliable, low-carbon power, according to a joint announcement by the two institutions.
The deal, signed in Paris on 26 June by World Bank President Ajay Banga and IAEA Director General Rafael Mariano Grossi, represents a striking departure from the multilateral lender’s historical reluctance to fund nuclear power—once deemed too costly, risky and politically sensitive for its portfolio.
Under the memorandum of understanding, the two institutions will collaborate across reactor lifecycle planning, safety protocols, regulatory frameworks and small modular reactor (SMR) feasibility. The World Bank, while not yet committing capital to specific projects, will begin supporting capacity-building initiatives in countries considering nuclear energy, particularly those with limited access to base load electricity, according to a World Bank statement. “We have never said nuclear was off the table,” Banga said during the signing ceremony. “But we also never created the conditions for it to be on the table.”
A slow pivot, decades in the making
The World Bank’s last direct investment in a nuclear power project was in 1959. Since then, the institution has explicitly avoided the sector, citing the complexity of nuclear procurement, waste management, and security concerns. Its new stance follows mounting pressure from shareholders—including the United States, Japan and France—to support a more diverse mix of energy sources in emerging markets, as reported by international development sources.
Global momentum has also been building. At COP28 in Dubai, over 20 countries pledged to triple nuclear capacity by 2050. Meanwhile, private sector interest in small modular reactors (SMRs)—compact, factory-built reactors that promise faster deployment—has surged, backed by energy firms and technology investors alike. IAEA chief Rafael Grossi called the partnership with the World Bank a “landmark step” that could unlock new channels of public and private finance. “If you want credible, science-based energy transition strategies, you cannot gnore nuclear,” he said in remarks published by the IAEA.
Funding gap meets geopolitical calculus
For the World Bank, the timing is both strategic and pragmatic. Electricity demand in developing countries is projected to more than double by 2035, requiring over USD 630 billion in annual investment for generation, grids and storage, according to internal World Bank estimates. Nuclear power, though capital-intensive upfront, offers long-term stability and emissions-free output—a critical advantage for regions facing unreliable renewables or fuel supply chains.
The shift is also geopolitical. Western suppliers, sidelined in many emerging nuclear markets by Chinese and Russian state-owned enterprises, see the Bank’s involvement as a lever to level the playing field. The United States in particular has lobbied for multilateral development banks to back SMRs as a means of countering Beijing and Moscow’s energy diplomacy, according to officials cited in Financial Times.
But safeguards remain a sticking point. The World Bank insists any nuclear-related support will adhere to strict safety and non-proliferation protocols, with the IAEA serving as a central oversight body. No funding will be allocated to countries lacking credible regulatory infrastructure or commitments to global nuclear standards, as stated in the memorandum.
Not a blank cheque
The Bank’s approach remains cautious. Officials stress that its renewed engagement does not amount to an endorsement of large-scale nuclear projects, which remain politically fraught in many parts of the world. Instead, it will initially focus on life-extension programmes for existing plants, workforce training, and SMR pilot assessments—areas seen as lower-risk and easier to implement.
Industry observers say the move could set a precedent for other multilateral lenders. The Asian Development Bank, which currently excludes nuclear from its climate finance strategy, is reportedly reviewing its policy stance. The African Development Bank has also shown renewed interest, particularly in connection with regional SMR deployment, as reported in the regional development briefings and interviews.
On the horizon
The World Bank–IAEA partnership is expected to accelerate in the second half of 2025, with technical assistance, policy dialogues and capacity-building missions planned for Sub-Saharan Africa, South Asia and parts of Eastern Europe. Countries such as Kenya, Indonesia and Uzbekistan have expressed early interest in exploring SMR feasibility, according to the IAEA.
Still, challenges remain. Financing nuclear power—even SMRs—requires long-term political commitment, robust public support, and regulatory maturity. Whether the Bank’s new posture translates into real-world projects may depend less on institutional strategy than on country-level readiness. What was once off-limits is now on the table—albeit under tight watch.
