The World Bank has lifted its long-standing ban on financing nuclear energy projects, marking its return to the sector for the first time in decades, President Ajay Banga announced on Wednesday.
In an email to staff, Banga said the bank would collaborate closely with the International Atomic Energy Agency (IAEA) to enhance its advisory capabilities, particularly around non-proliferation safeguards and regulatory frameworks.
The move comes as developing countries face a projected doubling of electricity demand by 2035. To meet this rising need, annual investment in energy infrastructure — including generation, grids, and storage — will need to rise sharply, from the current $280 billion to approximately $630 billion, according to Banga.
The decision reflects a broader shift in global energy policy as countries seek to balance climate goals with the need for stable and scalable power sources.
“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,” Banga said.
The Washington-based lender will also work to speed up the “potential of Small Modular Reactors” so these can become a viable choice for more countries eventually.
Banga, who took the helm of the development lender in 2023, has pushed for a change in the bank´s energy policy — and his letter comes a day after a board meeting.
“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.
Besides focusing on improving grid performance, he added that the institution will continue financing the retirement or repurposing of coal plants, supporting carbon capture for industry and power generation.
In April, on the sidelines of the International Monetary Fund and World Bank´s spring meetings, US Treasury Secretary Scott Bessent said the bank could use resources more efficiently by helping emerging countries boost energy access.
He said that it should focus on “dependable technologies” rather than seek out “distortionary climate finance targets.”
This could mean investing in gas and other fossil fuel-based energy production.
Bessent at the time also lauded the bank´s efforts toward removing restrictions on support for nuclear energy.
Beyond the shift in nuclear energy financing, Banga said Wednesday that the bank has yet to reach agreement within its board on whether it should “engage in upstream gas,” and under what circumstances it should do so.
The United States, which is the World Bank´s biggest shareholder, is among countries to have campaigned for the group to rethink its ban on supporting nuclear projects.
World Bank ends decades-long freeze on nuclear energy funding
