In a significant step forward, fourteen of the world’s largest banks and financial institutions are committing to support nuclear energy. This decision aims to help fund a new generation of nuclear power plants, which both the industry and governments see as essential for a sustainable energy future.
During an event on Monday in New York, which included White House climate policy adviser John Podesta, major institutions such as Bank of America, Barclays, BNP Paribas, Citi, Morgan Stanley, and Goldman Sachs announced their backing for a goal established at last year’s COP28 climate conference. This goal seeks to triple the global nuclear energy capacity by 2050.
While the banks didn’t outline specific actions, nuclear experts view this public endorsement as a welcome acknowledgment of the critical role nuclear energy must play in reducing carbon emissions.
The high costs and financing difficulties associated with nuclear projects have historically hindered the development of new plants. This has led to a noticeable slowdown in nuclear construction in Western countries since the significant reactor expansions in the 1970s and 1980s.
George Borovas, who leads the nuclear practice at the law firm Hunton Andrews Kurth and serves on the World Nuclear Association board, remarked that this moment could be transformative. Traditionally, banks hesitated to support new nuclear initiatives, fearing the political fallout and the complexities involved.
Borovas noted, “Banks at their senior management level would just say, we don’t understand anything about nuclear. We just know it’s very difficult, very controversial.” His hope is that this new bank support will help frame nuclear energy as a viable solution to climate issues rather than a last resort.
Financial institutions can boost nuclear projects through several mechanisms, including direct loans, project financing for nuclear companies, managing bond offerings, or pairing these companies with private equity or credit funds.
Historically, banks have been divided on nuclear energy due to financing intricacies, elevated risks, and compliance with environmental, social, and governance standards. Notably, the World Bank and other multilateral institutions do not finance nuclear initiatives.
BNP Paribas stated that achieving carbon neutrality by 2050 is impossible without nuclear energy, referencing the UN’s Intergovernmental Panel on Climate Change. Likewise, Barclays acknowledged nuclear power’s importance in addressing the variability of wind and solar energy.
Recent nuclear developments have mainly occurred in Asia and the Middle East, led by China. Yet, governments in developed nations are beginning to see nuclear energy as part of their strategies for achieving net zero emissions, with the US, UK, Japan, Sweden, and the United Arab Emirates among those signing the COP28 nuclear capacity commitment.
Nuclear energy is also gaining traction among major tech companies, highlighting its potential as a low-carbon option for powering data centers. Microsoft recently announced a long-term partnership with Constellation Energy to restart an 835-megawatt nuclear reactor at Pennsylvania’s Three Mile Island, previously slated for decommissioning. Furthermore, Oracle’s Larry Ellison recently revealed plans for a large data center incorporating small modular nuclear reactors.
Investment banker James Schaefer from Guggenheim Securities remarked, “As soon as you see those [tech] companies start to back their words by investing in nuclear through contracts, that’s when this all starts happening.” He emphasized that banks play a crucial role in facilitating connections between customers, investors, and nuclear technology providers.
Despite the growing support, there remains sensitivity surrounding nuclear energy within banks. Ahead of the announcement, participating banks issued non-binding commitments to private sector partners but hesitated to comment publicly, reflecting the cautious optimism around nuclear energy’s future as public views shift more positively.
Other banks endorsing nuclear energy include Abu Dhabi Commercial Bank, Ares Management, Brookfield, Crédit Agricole CIB, Guggenheim Securities, Rothschild & Co, Segra Capital Management, and Société Générale.