Nuclear power and the World Bank

The World Bank (WB) has long had a policy against financial or technical support to nuclear power ^[1]. The reasons for the policy are: the risks of accidents; the risks of weapons proliferation; the dated view that most Bank borrowers cannot operate nuclear power plants safely; and, lastly, that the Bank itself lacks the capacity to lend or advise for nuclear.

There is now pressure from the US to change the WB's nuclear policy. Members^[2] of the House of Representatives have introduced a bill (HR 1474) instructing the US Executive Director of the World Bank^[3] to advocate and vote for "the removal of prohibitions at the [WB] against financial and technical assistance for the generation and distribution of nuclear energy"; and " increased internal capacity-building at the [WB] bank for the purpose of assessing (A) the potential role of nuclear energy in the energy systems of client countries; and (B) the delivery of financial and technical assistance described to countries.’’

How would the proposed US legislation affect Bank operations ?

The operational paragraph of HR1474 is its instruction to Treasury to advocate and vote for the creation of a trust fund (TF) hosted at the Bank, a TF which would:

(1) ". .. provide financial and technical assistance to support the generation and distribution of nuclear energy in borrowing countries.";

(2) ‘‘. .. ensure that the international financial institution [IBRD or EBRD] makes financing available on competitive terms, including for the purpose of countering credit extended by the government of a country that is not a member of the OECD Arrangement on Officially Supported Export Credits”;

(3) ‘‘. .. exclusively support the adoption of nuclear energy technologies that meet or exceed the quality standards prevalent in the United States or a country allied with^[4] the United States”; and

(4) ‘‘. .. strengthen the capacity of the international financial institution [IBRD or EBRD] to assess, implement and evaluate nuclear energy projects."

What is wrong with HR 1474 ?

The draft law displays a characteristic American indifference to reality. There is the delusion that USA runs the world as it did in 1948, when war had ruined Europe and when Asia, Latin America, and Africa were much poorer. Behind that general fantasy is the specific one that the US can dictate terms to the WB as if it were, say, the District of Columbia. If the US does not get what it wants then it will stop funding the Bank, or so it is widely believed.^[5] Representative Hill has, moreover, claimed that ^[6] unnamed countries' interest in nuclear technology "can’t get the attention of western countries" because the WB is not listening to (American) reason on nuclear. Hill is apparently unaware of the facts that many western countries use nuclear power, export nuclear technologies, and promote their nuclear exports aggressively.

The proposed law has features that would make it inoperable in the Bank, even if the Board modifies the ban or lifts it altogether.

The trust fund (TF) proposed in HR 1474 has no money. The bill’s sponsors do not understand that a Bank TF must have money, it must have operating rules and it cannot be structured to advance solely the interests of US operators, which is patently the idea of HR 1474. Several nuclear power producers (France, Korea, Japan, China, Russia, India, others) have shares in the Bank and would eagerly endow a TF to advance their commercial interests but it seems to have escaped the overworked staffers who drafted HR1474 that those producers will, believe it or not, demand something in return for their political or financial support for the TF.

HR 1474 petulantly demands that the TF "ensure" that WB provide competitive financing to nuclear energy. The bill’s drafters do not know that the definition of competitive financing is flexible, that the terms of financing for things costing billions can be manipulated to make them eligible for TF support ^[7], and, again, that the Bank is not an agency of the USG. The hypothetical TF is in no position to "ensure" anything, despite the bold assertions of the draft law.

Behind the second objective of the TF proposed under HR1474 (ensure competitive financing) is the obdurate belief that international competitions are "unfair" to US interests. It follows from this belief that independent financing will eliminate such bias and allow US firms to compete on a fair basis. Now, from what we know of the competitiveness of the US nuclear industry compared to those of Japan and Korea-- this is bullshit. The US nuclear industry is not competitive and adjusting the terms of finance in greenfield countries will not make it so.

The third objective of the proposed TF (exclusively support technologies that meet US standards) fails the transparency test -- who decides if the technical standards have been met ? Competing suppliers will argue that their standards have been met and the Americans will argue that their standards have been met. The Bank's finance cannot be allocated efficiently where bidders cannot agree on the terms of competition.

Why the Bank should not finance nuclear power generation

Nuclear power generation poses unacceptable financial and political risks to the Bank. Associated with that fact are these specific reasons:

• Insuring nuclear generation in greenfield countries, where country risk is greater, would be more expensive than in exporting nations and some of these costs would have to be borne by political lenders, such as the World Bank or the EBRD, one way or another;

• The project cycle would become more expensive with nuclear operations;

• Competitive bids to build and operate nuclear in greenfield countries will be costly to prepare and, for that reason, are unlikely to attract many bidders;

• Potential bidders will want some guarantee of success (bid preparation would not be cheap) and the way they get such guarantees now is by export finance from their home countries;

• The Bank would take years to develop bid evaluation capacity or would have to rely on the project sponsors to evaluate their own bids;

• Construction times would be longer in greenfield countries;

• Operators will require take or pay contracts, which will force the buyers into long-term deals that become less attractive as renewables become cheaper; it would be tempting for the Bank to guarantee tariffs as part of its lending package, which would add the costs of technical obsolescence to the Bank's balance sheet;

• Bidders will lie about future costs of maintenance, accident prevention, and spent fuel costs;

• Safety and liability issues would cause a deluge of Inspection Panel cases^[8] which, given that the principal motivation of Inspection Panel members and their oleaginous staff is self-aggrandizement, would inevitably be accepted for investigation; IP cases would cause further operational delays and damage the Bank's credibility (again, this is a feature, not a bug, of the Inspection Panel);

• Even a few nuclear plants using the cheapest modular designs (e.g., South Korea) would absorb a significant amount of IBRD lending capacity and divert IBRD money from green lending;

• Design and construction times for nuclear, under the best conditions (small reactors in China, South Korea, Japan), are 5-8 years, during which time the cost of renewable & battery systems will fall;

• Bank support to nuclear, unlike support to renewables, creates no capacity in borrower countries. The foreign operator will design, build, and operate the plant, all at a premium to its FOB terms, having negotiated favorable long-term payments for taking on risks that no one else while failing to build operational capacity in local electricity supply, as would happen with renewables; and

Why this US law now ?

The draft US law is, broadly, part of MAGA’s campaign to deny global heating. It is, more specifically, motivated by special pleading from the domestic nuclear industry which believes it can force the WBG to give preference to US operators. That effort is also stimulated by the carbon oligarchy's effort to extend its dominance by using the fantasy of global nuclear to delay development of renewable and battery systems adapted to the needs of poor nations that now have low rates of electricity access. Associated with the bill is a media campaign (the Financial Times and Substack), evidently led by Representative Hill, to pretend that the US can dictate Bank policies. It is even possible that Hill sees this bill as a path to the Presidency of the Bank, a maneuver that would extend the long American tradition of imposing unqualified people on the Bank Group.

What should the Bank do ?

The Bank must resist pressure to revive lending for nuclear power generation.^[9] A compromise may be proposed that the Bank could agree to finance nuclear only in IBRD countries--given that IDA borrowers could not afford expensive nuclear facilities in their modest MDB allocations--as a way of keeping nuclear exposure off the weaker IDA balance sheet, but this idea solves none of the other problems listed above and must be rejected.

The Bank's Board should accept part of objective [4] as stated under HR1474 — “to strengthen the capacity of the [World Bank] to assess, implement, and evaluate nuclear energy projects”. I say “part” because there will never be a possibility of the Bank, or of any financial institution, “implementing” a nuclear power operation.

The Bank should agree to fund development of its own capacity for energy sector advice involving nuclear and other sources.^[10] This would amount to accepting two of the three proposed objectives (assess and evaluate but not implement) of the proposed TF under HR 1474. The functions of “assessing” and “evaluating” do need strengthening because the Bank has not had technical capacity in nuclear for decades.

The Bank’s instrument for its own capacity development and in client countries should be net income, not a trust fund. The Bank should allocate money from its net income to support capacity strengthening within the Bank and in borrower nations -- again, the reason not to create a multi-donor TF is to avoid undue influence from the few countries that now export nuclear technology -- but the Bank must recognize that its current inability to give professional technical advice on the role of nuclear power is inefficient and would, in many countries, delay the necessary green transition.

While the MDBs should never finance nuclear power generation, it is probably inevitable that they have some role in financing national and international distribution networks. The Bank cannot have such a role without stronger expertise in nuclear energy and using net income is an appropriate instrument to create that expertise.

* * *

[1]. The most recent Bank support to nuclear power was a loan to Italy in 1959.

[2]. Co-sponsors of the bill are French Hill (R-AR) and Ritchie Torres (D-NY). This is an odd pair. Hill chairs the House Financial Services Committee, is maybe the last of the Bush Republicans in Washington, and is, by MAGA standards, not entirely delusional; Torres' major legislative accomplishment seems to be mandating panic buttons in bodegas. I suppose Torres’ name is on the bill to allow Hakeem Jeffries to pretend that bipartisanship is effective in the House.

[3]. HR 1474 proposes the same instructions to the USED at the European Bank for Reconstruction and Development (EBRD), though this post does not comment much on that institution.

[4]. The phrase “or a country allied with the United States” may require some adjustment considering recent global developments.

[5]. See my Substack on why the World Bank should expel the USA. https://johnmcintire.substack.com/p/the-world-bank-should-expel-the-us?r=lxiat

[6]. The Financial Times, “US makes fresh push for World Bank to back nuclear power”, March 8, 2025.

[7]. Christoph Trebesch’s paper at the 2024 World Bank ABCDE conference on “The financial returns to China’s Belt and Road” is instructive on such manipulation.

[8]. One can easily see an extension of the Bank’s safeguards policy on “Projects on International Waterways” to the risks of radiation crossing international borders, a vision that would be particularly glorious to the many Panel members seeking to publish law review articles.

[9]. HR1474 also refers specifically to the EBRD, which is not an accident. France runs the EBRD, the French are world leaders in nuclear power for electricity, and they would of course be happy to accept EBRD and WBG subsidies to promote their own industry. The question — What should the Bank do if other MDBs change their nuclear policies ? — is relevant and I will come back to that in a future post.

[10]. The Bank should end today all financial support to fossil fuels for any purpose, but it is impossible to provide comprehensive energy sector advice without considering how to phase out fossil fuels.