Why the World Bank Needs to Get in the Game
Any serious effort to grapple with climate change must begin by reckoning with the math involved in transitioning to so-called net-zero carbon emissions—that is, the point at which humans are removing as much carbon dioxide from the atmosphere as they are adding to it, stopping humankind’s contribution to climate change. This transition to green energy is complicated by the fact that even energy sources widely considered to be “green” have negative externalities, despite what many policymakers may wish. In the Democratic Republic of the Congo, for example, children as young as seven mine cobalt, which is needed to make electric car batteries. In China, which controls 80 percent of all solar panel manufacturing, the solar industry relies on Uyghur slave labor. To put it simply, there is no such thing as a free lunch.
Although the International Energy Agency’s revised 2022 energy outlook raises some of these issues, it nonetheless lays out a path to net zero by 2050 that, as one would expect, maximizes wind and solar power while assuming countries can find and extract the required minerals at economic prices. But even under these optimistic assumptions, an often overlooked zero-carbon energy source still does much of the heavy lifting: to reach net zero by 2050, the IEA says nuclear energy capacity will need to double. Its model assumes an annual average of 30 gigawatts of new nuclear capacity coming online starting in the 2030s, and staying on that track until 2050.
Nuclear fission, the process that creates nuclear energy, produces abundant power while emitting essentially zero greenhouse gases, similar to wind, solar, and hydroelectric. Moreover, it is a safe and proven technology that already provides over half of U.S. carbon-free energy generation while operating nonstop instead of at the whim of Mother Nature.
What would a doubling of nuclear power require? According to the Oxford Institute for Energy Studies, the world would need to build 235 new reactors in the next eight years alone just to hit net zero by 2050. Since 440 reactors now operate globally and 60 new ones are under construction, the world would therefore need to construct and have online the equivalent of 180 more 1,000-megawatt reactors, or 25 more new reactors per year, by 2030, with further growth afterward to hit the 2050 target. This is a heavy lift, considering the many roadblocks that antinuclear groups put up to stop this zero-carbon power production, in addition to the lengthy permitting processes and the time and expense needed to bring a plant online.
There is also another hurdle in the way: the world’s largest multilateral green energy financier, the World Bank, has steadfastly refused to finance or co-finance nuclear projects. This self-imposed policy means that energy-hungry, developing countries have had to turn to authoritarian regimes for the financing and technology needed to build nuclear power plants. It is time for the bank to reverse this outdated, counterproductive policy, especially given its focus on climate change mitigation. Countries should no longer be denied one of the key tools needed to solve the ambitious math of net zero.
Although a few countries, such as Austria and Australia, stubbornly remain opposed to nuclear power, Japan and France, which had planned to shut down a portion of their nuclear reactors, reversed course last spring after Russia’s invasion of Ukraine. Germany, which was scheduled to close all of its reactors by the end of 2022, temporarily halted the shutdown of its final two reactors to avoid energy shortfalls resulting from the war in Ukraine. Still other European countries, including Poland and Romania, are going further by committing to purchase nuclear reactors made in the United States. For similar reasons, the Czech Republic selected Westinghouse as one of three finalists (along with companies from France and South Korea) for a current tender for new nuclear generation. Even more noteworthy, developing countries, including Ghana, Kenya, and the Philippines, announced within the last three months that they intend to construct new nuclear power plants to meet their economic development and clean energy goals.
From the 1960s through the first decade of this century, U.S. firms were the largest exporters of nuclear technologies worldwide, but over the last decade, developing countries have looked to Russia and China for help building new nuclear energy projects. Russia’s principal nuclear supplier, Rosatom, has signed memorandums of agreement with over 30 countries to provide nuclear development assistance, and currently Russia is building nuclear reactors in Bangladesh, Belarus, China, Egypt, India, and Turkey. For its part, China has only exported its technology to Pakistan, but it is actively pursuing other projects around the world. Developing countries have had to turn to Russia and China after the World Bank made it clear in 2013 that it would continue not to fund any nuclear projects.
At the time, the bank’s president, Jim Yong Kim, effectively banned financing nuclear projects, saying “Nuclear power from country to country is an extremely political issue. The World Bank Group does not engage in providing support for nuclear power. We think that this is an extremely difficult conversation that every country is continuing to have.” His public comments built on prior bank statements including one in 2009, when the bank said that financing nuclear “would engender serious risks related to proliferation, safety, and waste disposal.” More recently in 2021, it argued that financing nuclear is “not in its expertise.” These justifications were inaccurate then and continue to be so today.
The World Bank has steadfastly refused to finance or co-finance nuclear projects.
To begin with, the World Bank cannot blame its decision on a lack of expertise. The World Bank is part of the UN system and thus under the same umbrella as the International Atomic Energy Agency (IAEA), whose head, Rafael Grossi, has lobbied for the bank to end its ban. The bank can access this deep font of nuclear expertise in the same way it consults with outside experts and entities for projects in areas as diverse as air pollution management in Egypt, irrigation in Pakistan, and public administration modernization in Djibouti, not to mention more complex green energy projects all over the world, such as hydropower and geothermal engineering. National institutions, such as the Export-Import Bank of the United States, which do have nuclear expertise and have provided significant lending capabilities for nuclear projects, could also serve as a resource for the bank.
The other justifications the World Bank offers for its nuclear ban are just as specious. The IAEA has worked for over 70 years to establish a framework to prevent nonproliferation. This system includes a wide variety of safeguard measures, including real-time electronic monitoring, which provides an effective means to identify and prevent nuclear proliferation. Furthermore, civilian nuclear energy is not an easy gateway to nuclear weapons. The fuel generated from civilian light-water nuclear power plants, such as those in the United States, is not an effective source of potential weapons material. A country would require highly sophisticated and expensive capabilities to make it useful for military purposes.
What about other safety concerns? Opponents of nuclear power raise three famous nuclear disasters. The first is the Three Mile Island accident, which occurred in 1979 and was caused by deficient control room instrumentation and inadequate training on emergency procedures. While the event did result in the release of a small amount of radioactive gas—below background levels—the containment structure of the plant prevented a large release of radioactivity, and, according to the U.S. government, no one was killed or seriously injured as a result of the accident. Chernobyl, the most famous and devastating nuclear disaster, occurred in 1986. It was the result of a poor design (one that was not used outside the Soviet Union), reckless low power testing of the reactor without the review or approval of the designer, and a failure to warn the public about radioactive releases in a timely manner. Finally, the nuclear disaster at Fukushima, Japan, in 2011, resulted from ignoring historic tsunami data and building the plant too close to the ocean where the needed safety equipment was vulnerable to flooding.
These three accidents could have been avoided. For additional context, 600 civilian nuclear power reactors have operated since the 1960s (not to mention hundreds more military reactors). All in all, this track record is very good, especially when compared with the effects from comparable forms of energy. Indeed, when considering deaths per unit of electricity generated, nuclear energy has resulted in 99.8 percent fewer than coal, 99.7 percent fewer than oil, and 97.6 percent fewer than gas. In addition, a 2019 National Bureau of Economic Research paper estimated that Germany’s planned nuclear phaseout would cost more than 1,100 additional deaths each year as a result of increased air pollution caused by the use of fossil fuels. Germany, for the time being, has halted the closure of its final three nuclear power plants, thanks to Russia’s invasion of Ukraine.
In part, as a result of the lessons learned from the three accidents described above, the over 450 nuclear power reactors that make up today’s international nuclear industry have operated at exceptionally high safety levels under the watchful eyes of both national nuclear regulatory authorities, as well as the World Association of Nuclear Operators, a self-regulatory body. The industry has generally earned a well-regarded track record for safety, critical self-assessment, and a willingness to share best practices among all civilian nuclear peers worldwide.
Additionally, the latest generation of nuclear reactors being designed in the United States are smaller (typically a quarter or less of the size of reactors currently being marketed by Russia and China), easier to construct and finance, and possess enhanced levels of safety. These reactors are particularly desirable given that their size and cost make them more attractive to countries less able to afford 1,200-megawatt (or more) nuclear projects.
Finally, the concerns that the World Bank has raised about waste are also misguided, since nuclear fuel is the most highly regulated metal in the world as a result of the careful oversight by the civilian nuclear regulators of each nuclear power country. Whether it is stored in spent fuel pools at the reactors or in dry storage canisters away from the reactors, it has a track record of being effectively managed and stored; no civilian has been killed or even seriously injured from its storage. Although there have been significant political challenges to the proposed Yucca Mountain nuclear waste site in Nevada, Finland will be opening its permanent waste repository in 2024 and will lead the way in demonstrating that used nuclear fuel can be safely managed underground, even for 100,000 years. France has been recycling used fuel since the 1960s and within several years will follow Finland’s lead in opening its own permanent repository. This not only takes advantage of reusing the 96 percent of the energy that remains after the fuel has been used in a reactor but has also significantly reduced France’s generation of high-level waste, including plutonium. Other opportunities to address this issue, including developments in deep borehole technology (where the fuel is disposed of four to five miles underground) and the ongoing deployment of nuclear reactor designs that burn used nuclear fuel also provide examples of technology developments that can safely address concerns about high-level radioactive waste.
FUND THE FUTURE
At last year’s UN climate conference, known as COP27, industrialized economies (except China, the world’s largest emitter of greenhouse gases) promised to pay developing countries for their “loss and damage” from climate change. Developing countries felt it was an important step, but these countries need something better: cheap, reliable, abundant energy, including from all types of green energy, particularly those with steady baseload power such as nuclear. As the Egyptian economist Abla Abdel Latif told a U.S. congressional delegation at COP, Africa wants and needs financing to develop badly needed power. Perhaps it is one of the reasons Egypt ended up taking a loan from Rosatom (and got locked into Russian technology for decades) for its new nuclear plant.
Instead of paying for “loss and damage from climate change, which amounts to only pennies per person affected in the developing world, the World Bank and its funders should deploy those billions of dollars as low-interest loans for nuclear projects by secure, nonauthoritarian providers that will help these countries escape energy poverty with safe and reliable zero-carbon power.
In this effort, the bank could follow the lead of the United States, which finally ended its own ban on financing foreign nuclear projects in 2020, when the U.S. International Development Finance Corporation (DFC) agreed to lend for nuclear projects because they are viewed as being renewable energy sources. As the DFC rightly said in its announcement: “This change will also offer an alternative to the financing of authoritarian regimes while advancing U.S. nonproliferation safeguards and supporting U.S. nuclear competitiveness.” Unfortunately, under the Biden administration, the DFC has yet to finance a single nuclear project.
The DFC should lean forward, as its colleagues at the Export-Import Bank of the United States have done, and provide funding for U.S.-sponsored nuclear projects internationally. This could encourage the World Bank to do the same. The United States should also push for the World Bank’s policy to be reversed, as proposed by Representative Patrick McHenry, a Republican from North Carolina and the incoming chair of the House Financial Services Committee. His bill, the International Nuclear Energy Financing Act, or H.R. 1646, is expected to be reintroduced this year.
The World Bank cannot blame its decision on a lack of expertise.
Even the European Parliament redefined nuclear energy as green in a landmark vote in July 2022. By correctly changing the taxonomy of nuclear to environmentally friendly, European countries now have access to hundreds of billions in cheap loans and state subsidies. Thus, as Europe now has embraced nuclear (and even gas) as green, it continues to deny it to the developing world via its stance against nuclear at the World Bank and other multilateral regional development banks, ensuring Russia and China remain the only game in town.
In addition to making a massive contribution to reaching net zero, World Bank financing for nuclear projects would allow for a greater potential level of involvement by the IAEA to exercise more hands-on oversight during the life cycle of a nuclear project from conception through operations to decommissioning, which can range from 60 to 100 years. Today’s status quo is a lack of transparency on nuclear projects undertaken by China (in Pakistan) and Russia (in Iran), with the United States and Europe potentially being locked out of involvement with these programs for decades. Even if the bank provided financing only to assist in the creation of nuclear regulatory oversight activities for the host country seeking to build new nuclear generation, as opposed to funding the actual projects, it would increase Western involvement and enhance the global nonproliferation regime.
Similarly, funding nuclear research reactor projects that are involved with the production of radioisotopes, which have important medical uses, would create a triple win, and it would be akin to what U.S. President Dwight Eisenhower initiated during the Atoms for Peace Program in 1953. These projects could enable the establishment of independent, effective nuclear regulators; create an initial development project that could enhance indigenous nuclear capacity-building (including the development of local nuclear engineering and construction programs); and allow for the deployment of lifesaving health technologies. All of this could be accomplished in a manner fully consistent with maintaining nuclear safeguards.
An all-of-the-above green energy strategy is essential and means that much more nuclear power needs to happen, and quickly, for the world to stay anywhere close to a trajectory of net zero by 2050. This requires helping countries finance new projects. A good place to start is at the multilateral level via the World Bank, which could create new co-financing opportunities with the private sector as well as spur a change at the African Development Bank and the other multilateral regional development banks, in addition to the DFC and the Export-Import Bank. Given the reality of net-zero math and the change of heart about nuclear energy in Europe, the bank should have a robust discussion about its nuclear policy. It is a fortunate time for this debate to take place because the bank is seeking new ways to expand its lending capacity to address climate change. Changing the World Bank’s policy to provide funding for nuclear projects would be the quickest and easiest way to advance the net-zero effort in the developing world while also increasing security, safety, and prosperity.