By Sheriffah Noor Khamseah Al-idid Dato Syed Ahmad Idid

After decades of receiving negative perceptions, sentiments and comments as a controversial energy source, nuclear power has made a turnaround as a key clean energy source necessary to reach net-zero goals.

There is now increased recognition and support for nuclear power at the key global climate event – Conference of the Parties to the United Nations Framework Convention on Climate Change (COP) – which previously had an almost singular focus on variable renewable energy such as solar and wind as the solution to global warming.

The International Atomic Energy Agency (IAEA) had highlighted that in his first official trip as IAEA Director-General in 2019, Dr Rafael Mariano Grossi had travelled to COP25 in Madrid to make the case for nuclear power, which provides about a quarter of the world’s low-carbon electricity.

Since then, the IAEA and nuclear advocates have steadily increased their presence at the annual summit, starting at COP26 in Glasgow in 2021 and then in 2022 at COP27 in Sharm El-Sheikh, Egypt, where the IAEA hosted the event’s first nuclear-themed pavillion.

Financing Needs for Nuclear Power by IEA Study in 2021

In a 2021 study, the International Energy Agency (IEA) estimated that nuclear power’s contribution to world energy supply would need to double by mid-century to achieve deep decarbonisation. As part of that deployment, the IEA estimated that the nuclear sector would need an average investment of around US$90 billion per year from 2021 to 2030, US$94 billion per year from 2031 to 2040, and US$80 billion per year from 2041 to 2050 – amounts that are more than double the global average investment of US$36 billion per year from 2016 to 2020.

COP27 in Sharm El-Sheikh, Egypt

World Nuclear Association Director-General Sama Bilbao y León had underscored that Sharm El-Sheikh marked the first time the global nuclear community had a large pavilion in the Blue Zone, at the heart of COP27.

The event at the IAEA-led #Atoms4Climate pavilion – the first-ever nuclear-themed pavilion in the 27-year history of the United Nations Climate Change Conference – began with Grossi playing the role of journalist and interviewing IEA Executive Director Dr Fatih Birol. Grossi then led wide-ranging talks with senior officials from Poland, the United Arab Emirates, the United States of America and the World Association of Nuclear Operators (WANO), who provided their perspective on present and future challenges and prospects for nuclear power.
At COP27 in November 2022, Birol had made the case that nuclear power was making a comeback but remarked that the international financial community had so far “failed” to provide the level playing field needed for nuclear to help the world tackle its most pressing challenges, from climate change to sustainable development. “I don’t give them a passing grade.”

IAEA Director-General Rafael Mariano Grossi (right) spoke with IEA Executive Director Dr Fatih Birol at the IAEA event – Affordability, Resilience and Security of Energy Supply' – which took place at the IAEA-led COP27 #Atoms4Climate pavilion. Photo: IAEA

Financing Nuclear Power: EU Taxonomy, Green Bonds and Loans 2021-2023

Arising from the need to reach net-zero and to enhance energy security following from the geopolitical tension due to the Russia-Ukraine war, the European Union agreed in July 2022 to a notable inclusion of nuclear power in the EU Taxonomy, a classification system for sustainable activities, which marked a turning point as this includes nuclear power plants in its list of investments that can be labelled and marketed as green.

Corporate Nuclear Green Bonds

Since 2021, nuclear power companies in Canada, France, Finland and United States had updated their Green Bond Framework to include nuclear power to support the maintenance, refurbishment and lifetime extension of current nuclear power reactors and the construction of new reactors via nuclear green bonds and loans. Bruce Power and OPG, nuclear power companies in Canada, had included nuclear in their Corporate Green Bond Framework to access C$500 million in November 2021 and C$300 million 2022 while French utility EDF and Finnish Utility TVO had updated their Green Bond Framework to include nuclear in November 2023 to access Euro 1 Billion and 15 December 2023 to access Euro 280 million for lifetime extension of their nuclear power plants.

Sovereign Nuclear Green Bond

Canada achieved the world’s first as a nation when it updated its sovereign Green Bond Framework on 21 November 2023 to support lifetime extension of current nuclear power reactors, the construction of new reactors, research and development, and some support for nuclear supply chain via nuclear green bonds and loans.

Bank’s Green Loan

Credit Agricole had updated its Green Loan framework to include nuclear and, on 18 November 2022, EDF and Crédit Agricole CIB announced the signing of a Euro 1 billion bilateral green loan dedicated to finance the maintenance of EDF’s existing nuclear power plants in France.

A Flashback to COP28 in Dubai, UAE

In view of the increasing destructive impact of climate change, many countries around the world are showing renewed interest in nuclear power, including countries that previously had sought to phase out the technology.

This has shifted nuclear power into the mainstream of discussions and the world has witnessed nuclear power events elevated from one dedicated nuclear pavilion in COP27 to six dedicated nuclear pavilions at COP28, providing nuclear power the platform for acceptance and discussion in recognition of its fundamental role in climate change and helping the world avert a climate crisis.

The IAEA has spotlighted that “as a chain reaction from the full success of Atoms4Climate at COP27, six nuclear dedicated pavilions in the Blue Zone and two nuclear pavilions in the Green Zone appeared at COP28,” Wei Huang, Director of the IAEA’s Division of Planning, Information and Knowledge Management, said at the CO28 Presidency event where he read out the IAEA Statement on Nuclear Power.

In the statement, the IAEA and its Member States that are nuclear energy producers and those working with the agency to promote the benefits of peaceful uses of nuclear energy acknowledged that all available low emission technologies should be recognised and actively supported.

COP28 had ushered in a watershed moment for nuclear power as several significant events and development had taken place. On 1 December 2023, IAEA DG Grossi delivered the IAEA’s Landmark Statement “Net-Zero Needs Nuclear” and, on 2 December 2023, twenty-two World Leaders had signed a Declaration to Triple Nuclear Capacity in 2050 from the current capacity in 2023.

Three more countries have joined the declaration since then, and the number of participants in this pledge came to 25.

The IAEA spotlighted that the landmark declaration invited the World Bank, regional development banks and international financial institutions to include nuclear in their lending, while underscoring the need for secure supply chains to ramp up deployment of the technology.

Additionally, another first was achieved at COP28 as the Global Stocktake had called for accelerating the deployment of low-emission technologies including nuclear energy to help achieve deep and rapid decarbonisation.

Notwithstanding the above great strides achieved, Grossi had remarked at the summit that “achieving a fair and enabling investment environment for new nuclear projects remains an uphill battle. We are not at a level playing field yet when it comes to financing nuclear projects.” (https://www.iaea.org/newscenter/news/nuclear-power-finally-has-its-moment-at-un-climate-summit)

Banks Pledge to Support Nuclear Power at Climate Week New York 2024

On the sidelines of Climate Week in New York City, major banks, government representatives and industry executives met at the Financing the Tripling of Nuclear Energy – Leadership Event, followed by the Net-Zero Nuclear Forum, hosted in the Rainbow Room, Rockefeller Centre.

On the sidelines of Climate Week in New York City, major banks, government representatives and industry executives met at the Financing the Tripling of Nuclear Energy – Leadership Event. Photo: Nuclear for Australia

In the presence of White House Climate Policy Adviser John Podesta, 14 financial institutions, namely Abu Dhabi Commercial Bank, Ares Management, Bank of America, Barclays, BNP Paribas, Brookfield, Citi, Credit Agricole CIB, Goldman Sachs, Guggenheim Securities LLC, Morgan Stanley, Rothschild & Co., Segra Capital Management, and Societe Generale had pledged their support for the goal first set out at the COP28 climate negotiations last year to triple the world’s nuclear energy capacity by 2050.

2024 Edition of the IAEA’s Climate Change and Nuclear Power Report

The IAEA has dovetailed that the 2024 edition of the IAEA’s Climate Change and Nuclear Power report recently launched on the margins of the Clean Energy Ministerial (CEM) in Brazil had highlighted the need for a significant increase in investment to achieve goals for expanding nuclear power.

According to the report, global investment in nuclear energy must increase to US$125 billion annually, up from the around US$50 billion invested each year from 2017 to 2023, to meet the IAEA’s high-case projection for nuclear capacity in 2050. The more aspirational goal of tripling of capacity, which more than 20 countries pledged to work towards at COP28 last year, would require upwards of US$150 billion in annual investment.

“Across its near century-long lifetime, a nuclear power plant is affordable and cost- competitive. Financing the upfront costs can be a challenge however, especially in market-driven economies and developing countries,” said Grossi.

“The private sector will increasingly need to contribute to financing, but so too will other institutions. The IAEA is engaging multilateral development banks to highlight their potential role in making sure that developing countries have more and better financing options when it comes to investing in nuclear energy.”

Fast Forward to COP29

COP29 takes place from 11 to 22 November 2024, in Baku, Azerbaijan.

In tandem with the increasing importance of nuclear energy as part of clean-energy solution to address climate change, the IAEA will showcase nuclear solutions for climate action in some 40 events at COP29, a significant increase in the number of events compared to COP27 and COP28.

A Call for Investment

The IAEA spotlighted that a central theme of COP29 will be the pressing need for increased climate finance. A UN report released on 28 October indicates that current policies and investments fall far short of what is needed to keep global temperature rise below 1.5°C in this century, the target of the Paris Agreement.

The agency highlighted that Grossi will join high-level representatives from the COP29 Presidency, the International Energy Agency (IEA), the United Nations Economic Commission for Europe (UNECE), multilateral development banks and the nuclear industry in an event hosted by the COP29 Presidency on “Financing Low Carbon Technology, including Nuclear Energy” to discuss the crucial role of governments, multilateral development banks and the private sector in scaling up nuclear energy.

Recommendations for COP29 for Financing Low-Carbon Technology, including Nuclear Energy

1. In view of increasing cost and investment projections for nuclear power to triple nuclear capacity by 2050 to reach net-zero goals, unlocking development and private capital to support and complement public financing is critical. Thus, support by multilateral banks, regional banks, national banks and countries are urgent.

2. Apart from the EU Taxonomy, which had included nuclear as part of list eligible to access sustainable financing, more regions including amongst others ASEAN, Middle East or MENA could also consider incorporating nuclear energy into the ASEAN and MENA Taxonomy.
3. Additionally, corporates including nuclear companies could also update their corporate green bond framework to include nuclear energy to support maintenance, refurbishing, lifetime extension of existing nuclear power plants and construction of new nuclear power plants.

4. Countries could update their Sovereign Taxonomy to include nuclear energy similar to Canada which has issued nuclear green bonds.

5. Multilateral development banks including the World Bank, regional banks including the European Investment Bank, ASEAN development banks as well as national banks could consider updating their green bond and green loan framework to include nuclear to support the financing of nuclear power.

6. Strategies must be developed to enhance Innovation in Financing Nuclear Power to expand the sources as well as the quantum of financing available to support nuclear power contributing to the successful tripling of nuclear capacity by 2050 to ensure the world reaches and not misses the net-zero goals.

-- BERNAMA

Sheriffah Noor Khamseah Al-idid Dato Syed Ahmad Idid is an innovation & nuclear advocate and an alumna of Imperial College London, United Kingdom