The latest edition of the International Atomic Energy Agency’s (IAEA) Climate Change and Nuclear Power report for 2024 has been unveiled, shedding light on the imperative need to ramp up investments in nuclear energy to align with global climate objectives. Launched at the Clean Energy Ministerial (CEM) in Brazil, the report serves as a comprehensive guide for the expansion of nuclear power, emphasizing its pivotal role in assisting nations in achieving net-zero emissions by 2050.
Amid escalating concerns over climate change and energy security, countries are turning to nuclear power as a feasible solution. The report underscores that a swift proliferation of clean energy technologies is essential to attain net zero emissions by mid-century. According to the International Energy Agency (IEA), meeting the target of net zero carbon dioxide (CO₂) emissions by 2050 will necessitate annual investments in the energy sector ranging from $4.7 to $5 trillion from 2030 to 2050, a substantial rise from the $2.8 trillion invested in 2023.
The IEA projects that achieving net zero by 2050 will demand more than doubling the installed capacity of nuclear power, aligning with the IAEA’s high-case scenario that foresees significant growth in the sector. In this scenario, nuclear energy is anticipated to play a crucial role in fostering a diverse and resilient energy mix, with the IAEA’s high-case projection indicating a need for a 2.5-fold increase in nuclear power capacity by 2050.
This expansion would offer a dependable source of low-carbon energy, complementing renewable sources such as wind and solar power. The report emphasizes that nuclear energy can provide a stable baseload of clean electricity, essential for integrating intermittent renewables efficiently into the grid. This steady power generation can facilitate the seamless incorporation of other renewable energies even during periods of low wind or solar resources.
Furthermore, nuclear power is recognized as a vital tool for decarbonizing industrial sectors and supporting advanced energy systems like hydrogen. However, realizing these ambitious nuclear power targets will necessitate substantial investments.
The IAEA estimates that global investment in nuclear energy must rise to $125 billion annually, a significant increase from the approximately $50 billion invested per year between 2017 and 2023. This funding is crucial for constructing new reactors, upgrading existing infrastructure, and ensuring safe operations, essential components for meeting the IAEA’s high-case projection for nuclear capacity expansion by 2050.
To achieve a more ambitious goal of tripling nuclear capacity, which over 20 countries committed to pursuing at COP28, annual investments would need to surpass $150 billion. These funds would support key actions vital for reaching nuclear power capacity goals, including building new nuclear power plants, advancing reactor technologies, and deploying small modular reactors (SMRs).
SMRs hold particular appeal for emerging markets and developing nations due to their smaller size, lower upfront costs, and potential for use in remote areas. IAEA Director General Rafael Mariano Grossi stressed that while nuclear power plants are cost-competitive and affordable over their operational lifespans, securing the necessary upfront capital remains a challenge, especially in market-driven economies and developing countries with limited access to financing.
Grossi highlighted the increasing need for the private sector to contribute to financing nuclear projects, alongside other institutions. The IAEA is engaging with multilateral development banks to underscore their potential role in providing developing countries with enhanced financing options for investing in nuclear energy.
The report delves into strategies for unlocking private-sector finance, a topic of growing global interest. During New York Climate Week last month, 14 major financial institutions, including some of the world’s largest banks, expressed their willingness to support nuclear power projects, recognizing its potential in achieving climate objectives. These institutions are prepared to contribute to financing new nuclear projects, driven in part by developments in sustainable finance frameworks like the EU’s taxonomy for sustainable activities, which now includes nuclear power.
In 2023, the issuance of the first green bonds for nuclear projects in Finland and France marked a significant milestone in sustainable nuclear financing, signaling a shift towards acknowledging nuclear energy as a sustainable component of the clean energy transition. By incorporating nuclear power into green finance frameworks, countries can attract more investment to bolster new projects and refurbish existing reactors.
To bridge the financing gap, the IAEA’s report underscores the necessity for policy reforms and international cooperation. It advocates for the development of robust regulatory frameworks and innovative delivery models to enhance the attractiveness of nuclear projects to investors. Additionally, fostering partnerships among governments, financial institutions, and the private sector is deemed essential for mobilizing the required capital.
Despite the optimistic outlook, the IAEA’s 2024 report acknowledges the challenges in expanding nuclear power, including the need for skilled labor, supply chain development, and stakeholder engagement to ensure the smooth implementation of new projects. The report emphasizes the significance of public acceptance and community engagement in advancing nuclear energy projects, underscoring the importance of transparent communication about the safety, environmental benefits, and economic impact of nuclear power to garner public support and dispel misconceptions about nuclear technology.
Ultimately, the report emphasizes that a successful transition to a global clean energy mix hinges on unlocking the full potential of nuclear power through appropriate investments and collaborative efforts.
