How Multilateral Banks Are Holding Back the Developing World
By blocking funding for nuclear projects, the World Bank and others are closing off low-emissions economic development
Developing countries are forging their own path to seize the benefits of nuclear energy. Out of about 60 reactors under construction around the world, 16 are in developing nations, including Bangladesh, India, and Pakistan, that are still aiming to deliver universal electricity access to growing populations. With nuclear power likely to play an important role in the pathway to global electricity access and emissions-free energy, many developing countries are keen to pursue nuclear technology development.
Last year, Pakistan connected its Karachi 3 reactor to the grid, the newest of 6 reactors operating throughout the country. Bangladesh expects to connect its first nuclear power plant to the grid this year, which will supply 9% of Bangladesh’s electricity once completed. India is constructing 8 more reactors as a part of its infrastructure development program. These are a few early success stories from a growing list of developing countries turning to nuclear power.
But despite this promising progress, developed countries have refused to support international development finance for nuclear energy projects. Key organizations such as the World Bank do not offer nuclear financing, sometimes claiming a lack of relevant expertise. Yet the real reason for the World Bank’s inaction is Germany, which internally steers the bank’s anti-nuclear dynamics.
It is time to challenge the longstanding effort to stifle developing countries’ access to nuclear energy. Russia’s war in Ukraine has reemphasized the importance of energy security, with many countries now re-evaluating the benefits of nuclear power. Germany’s neighbors are increasingly opposed to Berlin’s efforts to interfere with nuclear projects in Europe, and they can extend the same pushback to the World Bank. If developed nations are serious about helping poor nations develop—and, especially, about promoting green energy as they do—they must start including nuclear power in their efforts.
How Nuclear Power Benefits Developing Nations
Abundant, reliable, clean energy powers economic growth. Producing approximately 24% of the world’s clean electricity, nuclear power offers the potential to help support both an energy-rich future and an emissions-free pathway.
A key advantage of nuclear power projects in growing economies is that they provide a large and relatively fast boost to around-the-clock electricity generation. That’s why Nigeria, where only 55% of the population has electricity access, is considering closing its electricity gap with nuclear power. There, a few projects could ramp up power generation and energy access fairly quickly. In the long term, nuclear power could become more accessible to poor countries, especially in Africa, which expects to double its population by 2050. Growing populations mean growing energy needs, often best served by high-capacity, centralized energy sources.
Outside of Africa, too, Indonesia has already begun to develop a 10-MW conceptual design for a nuclear power plant with Russia. It plans to construct the reactor in Serpong and deploy it by 2045. And last year, Jamaica’s Energy Minister stated Jamaica will pursue nuclear power for long-term energy security, an important step for a small island nation greatly dependent on imported fossil fuels.
Critics of nuclear power often point to renewables as a far cheaper alternative. While renewables do offer a cheaper levelized cost of electricity (LCOE), such per-unit metrics alone don’t account for total attributes the electricity system must deliver. For example, nuclear energy greatly strengthens resilience and reliability. Indeed, decisions to adopt technologies as part of a system should never be based on crude assessments of which technology is ‘better’ or ‘worse’, but must rather on how different technologies can support one another to produce the best and most affordable combination overall.
Development banks should take responsibility for aligning their decision-making accordingly. Assisting developing nations with such investment is precisely the reason they exist. However, their decisions have often done the opposite.
Multilateral Banks’ Nuclear Problem
To be sure, the World Bank’s job is not easy. It faces a structural problem in that, the more funds a country adds into the bank, the larger that country’s voting share becomes. This has given a handful of developed countries majority control over where funds are spent and in what ways, letting nuclear-opposing countries such as Germany block any serious consideration of nuclear power project financing.
Germany, the fourth largest shareholder in the World Bank and a key member in the European Bank for Reconstruction and Development (EBRD), is infamously opposed to nuclear power. In recent decades, it has opted to extend the life of its coal plants while steadily retiring its nuclear plants. It led the opposition to classifying nuclear power as green under the recently-formulated EU green investment taxonomy, and it has opposed nuclear projects in neighboring countries including Poland and the Netherlands. During the 2021 COP26, Austria formed an alliance with Germany, Denmark, and Portugal that sought to de-classify nuclear energy as a clean energy technology, categorizing nuclear power as harmful as fossil fuels.
For all of this, it has come under increasing criticism from its allies. At a time when the EU is scrambling to ensure its energy security without Russian gas, Germany exacerbated the problem by shutting down its nuclear plants. France and other notable international groups have spoken out against this decision. Some polls suggest even a majority of Germans were against shutting down the country’s remaining nuclear plants, from 52% to as much as 67%. Germany’s insistence on patrolling nuclear plants in neighboring countries is becoming far less tolerant in this time of crisis, and it's not the first time it has done so with its previous opposition to the Temelin nuclear power plant in the Czech Republic. The mounting internal and external criticism on Germany's poor energy decisions has only increased the spotlight for nuclear reform within the World Bank.
Changing the World Bank’s position on funding for nuclear power projects depends on lessening Germany’s anti-nuclear influence. The other primary World Bank shareholders—especially France, the United Kingdom and the United States—should increase pressure on Germany to change its stance. In particular, the United States, with the greatest voting power as the bank’s largest shareholder, should lead a strong drive to update the bank’s nuclear financing policy. Recently, U.S. senators are pushing for more supportive nuclear stances like the International Nuclear Energy Financing Act, established to promote nuclear financing at the World Bank. If the bill is enacted, the US executive director at the World Bank would be required to vocalize support and vote for nuclear financing. Regardless of its outcome, the United States will play a key role in access to nuclear funding within the World Bank.
Moment of Opportunity
While such advocacy will undoubtedly prove difficult, the ongoing war in Europe has created a political opening for multilateral development lenders to reconsider their nuclear financing policies.
Despite Germany’s opposition, a wartime energy crisis helped push Europe to officially include nuclear power within its categorization of green investments in 2022. Even Germany, for a time, postponed its decision to close its last 3 reactors under pressure from the EU and the German public over energy security concerns. For the time being, Russia will likely remain uninterested in supplying adversaries with cheap gas. Countries will also experience increased competition as LNG demand in Asia is expected to vastly increase, with some studies estimating more than a three-fold increase by 2050 due to emerging Asian LNG markets.
Germany is now desperately trying to import gas from North and West African countries, including Senegal and Mauritania. Incidentally, Senegal is already pursuing the development of a research reactor for scientific applications and has expressed interest in building its first nuclear power plant. Mauritania has committed to an IAEA framework to explore its own use of nuclear technologies to its goals, including increased access to reliable energy. These countries are now in the perfect position to negotiate with Germany to secure their nuclear power access.
Russia’s war in Ukraine has thus provided the perfect opportunity to change the rules of the game. Germany overplayed its hand trying to dictate poor energy decisions for the EU. The same flawed game plan has influenced the World Bank’s nuclear policy for decades and is now subject to review. Germany and other World Bank executives have recently been pushing for reform to ensure the bank is properly addressing climate change. Germany’s anti-nuclear influence should be at the top of the list.