The World Bank is making a nuclear comeback.

For the first time in decades, the Washington-based institution is lifting its ban on financing nuclear energy projects, giving developing countries a fresh opportunity to tap atomic power as part of their energy mix. World Bank President Ajay Banga confirmed the move in a memo to staff, marking a major shift in the bank’s energy policy.

The decision comes at a critical time. Global electricity demand, especially in developing nations, is expected to more than double by 2035. To meet that surge, annual investment in energy generation, grids and storage will have to jump from $280 billion to around $630 billion, according to Banga.

With the clock ticking, the World Bank is teaming up with the International Atomic Energy Agency to ensure that its new direction strengthens safeguards against nuclear proliferation and supports countries in developing proper regulatory frameworks.

"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 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."

One of the key priorities is to accelerate the roll-out of Small Modular Reactors, compact nuclear plants seen as promising options for countries that may not have the capacity for traditional, large-scale nuclear facilities.

The shift signals a broader rethink of the World Bank’s role in the global energy transition. Since taking leadership of the bank in 2023, Banga has consistently argued for practical, flexible solutions to development challenges. Nuclear energy, once a taboo in World Bank circles, is now being positioned as a reliable tool to help address energy poverty and growing demand.

Beyond supporting nuclear projects, Banga said the World Bank will continue financing programs to retire or re-purpose coal plants. It will also fund carbon capture projects to help clean up heavy industries and fossil fuel-based power generation.

The move has earned praise from Washington. US Treasury Secretary Scott Bessent earlier urged the World Bank to prioritize "dependable technologies" over what he called "distortionary climate finance targets." For Bessent, dependable means investing in both gas and nuclear energy to strengthen energy security in emerging markets.

Even with the World Bank’s new nuclear stance, Banga said discussions are still ongoing within its board on whether to expand support for gas projects and under what circumstances that should happen.

For now, one thing is clear. The World Bank’s careful embrace of nuclear energy marks a new era of energy financing, especially for countries caught between ambitious climate goals and the urgent need for stable electricity.

This time, the world’s largest development lender is going nuclear again, not just with ambition, but with international safeguards, strategic partnerships, and a focus on results.