World’s biggest banks pledge support for nuclear power

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Fourteen of the world’s biggest banks and financial institutions are pledging to increase their support for nuclear energy, a move that governments and the industry hope will unlock finance for a new wave of nuclear power plants.

At an event on Monday in New York with White House climate policy adviser John Podesta, institutions including Bank of America, Barclays, BNP Paribas, Citi, Morgan Stanley and Goldman Sachs will say they support a goal first set out at the COP28 climate negotiations last year to triple the world’s nuclear energy capacity by 2050.

They will not spell out exactly what they would do, but nuclear experts said the public show of support was a long-awaited recognition that the sector had a critical role to play in the transition to low-carbon energy.

The difficulty and high cost of financing nuclear projects has been an obstacle to new plants and contributed to a significant slowdown in western countries since a wave of reactors was built in the 1970s and 1980s.

“This event is going to be a game-changer,” said George Borovas, head of the nuclear practice at law firm Hunton Andrews Kurth and a board member of the World Nuclear Association. Until now, he said, banks had found it politically difficult to support new nuclear projects, which often required sign-off from the chief executive’s office.

“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.” He added that the support from the banks would help normalise nuclear energy as “part of the solution for climate change” rather than “a necessary evil”.

Banks could support new plants by increasing direct lending and project finance to nuclear companies, arranging bond sales or introducing companies to private equity or credit funds.

Financial institutions have long been divided on nuclear energy, because of the complexities of project financing and high level of risk, but also because of questions about whether it complies with organisational environmental, social and governance standards. The World Bank and other multilateral institutions do not provide any finance to nuclear projects.

BNP told the Financial Times there was “no scenario” in which the world could hit carbon neutrality by 2050 without nuclear power, citing the UN’s Intergovernmental Panel on Climate Change. Barclays said it saw a role for nuclear as a solution to the intermittency of wind and solar energy.

Most of the world’s recent new nuclear plants have been built in Asia and the Middle East, led by China. But governments in developed countries have started to argue that nuclear energy can be a solution to their net zero commitments, and the US, UK, Japan, Sweden and United Arab Emirates were among those that signed the COP28 commitment to triple capacity.

Nuclear energy has also started to gain support from Big Tech, which sees it as one low-carbon solution to powering data centres. On Friday, Microsoft announced a 20-year deal with Constellation Energy to restart an 835-megawatt nuclear reactor at Three Mile Island in Pennsylvania that was in the process of being decommissioned. Larry Ellison, co-founder and chief technology officer of Oracle, said this month that the company was designing a huge data centre with “permits for three . . . small modular nuclear reactors”.

“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,” said James Schaefer, an investment banker at Guggenheim Securities, which is signing the pledge.

“We’re having conversations with them. You ask what banks do, it’s connecting customers and investors with the producers and owners of this technology. Wall Street will connect the dots,” he added, saying that “this is the moment just before the dawn” for financing a new wave of nuclear plants.

Nevertheless, there remains a high degree of sensitivity around the subject inside banks.

Ahead of the event, participating banks sent non-binding commitments on nuclear energy to private sector partners, according to one person familiar with the announcement. But multiple banks declined to comment ahead of the event, underscoring this sensitivity, even as public opinion on nuclear energy in the US and Europe has become more favourable.

The other financial institutions expressing support for nuclear are Abu Dhabi Commercial Bank, Ares Management, Brookfield, Crédit Agricole CIB, Guggenheim Securities, Rothschild & Co, Segra Capital Management and Société Générale.