The nuclear energy sector is currently experiencing a resurgence in a number of countries in response to the global energy crisis. At the COP28 summit, 22 countries committed to tripling nuclear power capacity by 2050, and in the last month, 34 nations pledged to fully unleash the potential of nuclear energy. However, in spite of this positive trajectory, global banks are hesitant to provide the $5 trillion necessary for the nuclear industry’s development until 2050.
During the International Atomic Energy Agency’s nuclear summit in Brussels, bankers expressed their reluctance to fund the nuclear industry due to perceived high risk. Former U.S. Energy Secretary Ernest Moniz echoed this sentiment, highlighting that the pessimism among bankers could become a self-fulfilling prophecy. Vice President Thomas Ostros of the European Investment Bank stressed the importance of countries prioritising renewables and energy efficiency, with Ines Rocha of the European Bank of Reconstruction and Development and Fernando Cubillos of the Development Bank of Latin America sharing similar views, stating that nuclear projects are lower in their lending priorities.
Ostros suggested that significant government support is crucial for the nuclear sector to thrive, given the hesitance of private banks to finance nuclear projects. The U.S. government has already played an active role in the sector by funding the development of next-generation small modular reactors and advanced fuel cycle reactors. Furthermore, federal agencies such as the Export-Import Bank of the United States (Ex-Im Bank) and the U.S. Trade and Development Agency (USTDA) have provided financing for overseas nuclear projects and the export of nuclear power technologies.
In a significant development, the U.S. federal government has agreed to provide a $1.5 billion loan to restart a nuclear power plant in southwestern Michigan, marking the first time a nuclear plant in the U.S. has been revived after being abandoned. This decision has been applauded by Michigan governor Gretchen Whitmer, as nuclear power is a major source of carbon-free electricity and supports a significant number of jobs.
Meanwhile, in California, regulators have approved the operation of the Diablo Canyon plant through 2030, indicating a continued reliance on nuclear power as the state transitions towards renewable energy sources. The assistance from the federal government has also enabled Pacific Gas & Electric, the plant’s owner, to repay a state loan.
Ultimately, the resurgence of the nuclear energy sector is facing challenges due to banks’ reluctance to finance projects. As the world grapples with the energy crisis and the need to meet climate goals, it is increasingly clear that government support may play a critical role in unlocking the potential of nuclear energy.
Written by Alex Kimani for Oilprice.com