Trump's push to use global aid for nuclear projects alarms development groups

Trump's push to use global aid for nuclear projects alarms development groups
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A new effort by the Trump administration to bolster the nuclear industry is eyeing a surprising source of financing — a fund designed to fight poverty in developing countries.

In a list of official recommendations to President TrumpDonald John TrumpDavis: Supreme Court decision is bad news for Trump, good news for Vance Meadows trying to root out suspected White House leakers by feeding them info: Axios Pressley hits DeVos over reopening schools: 'I wouldn't trust you to care for a house plant let alone my child' MORE last month, the Nuclear Fuels Working Group argued the U.S. needs to sell nuclear power technology abroad and battle the influence of countries like China and Russia that have become dominant suppliers.

One way to do that, the group said, is to lift restrictions at the U.S. International Development Finance Corporation (DFC) to let the agency fund nuclear projects alongside other development work.

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But development groups worry that tapping the DFC to greenlight nuclear projects will do more to promote American interests than alleviate poverty.

“I struggle to see it as something they should be doing,” Conor Savoy, executive director of the Modernizing Foreign Assistance Network.

There's also a concern that the projects won't benefit the poorer countries the DFC is charged with helping. Setting up nuclear power systems requires a higher level of infrastructure, meaning overseas projects might be more likely to find a home in Eastern Europe than Sub-Saharan Africa.

“The DFC was supposed to invest in those countries very sparingly,” Savoy said of wealthier nations.

To access DFC funds for an initiative of this kind, the agency would have to lift its prohibition on supporting nuclear projects, a move that only requires an internal policy change, without any congressional action.

The agency has signaled a willingness to make that change.

“DFC welcomes the recommendation in the administration’s Nuclear Fuel Working Group report to remove DFC’s prohibition on financing nuclear power projects in developing countries. Access to affordable and reliable power is essential for developing countries to advance their economies,” the agency said in a statement Monday.

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“This change could help bring a zero-emission power source to the developing world while offering an alternative to the predatory financing of authoritarian regimes,” the agency added.

Those comments echo what the Nuclear Fuels Working Group said in its report last month.

“America’s broad strategy of energy dominance has a gaping vulnerability,” the group said. “This reality threatens American energy security, narrows or eliminates foreign policy options and erodes American international influence” in the nuclear market.

The DFC was started in 2019, replacing its predecessor — the Overseas Private Investment Corporation — with double the funding and fewer restrictions on how to spend it.

But the $60 billion agency also has an expanded mission: elevating the world’s poorest countries while also advancing U.S. foreign policy.

Development experts, however, say there’s been an imbalance between those two goals in the agency’s short history.

“The underlying tension we’re seeing at DFC is doing investments that have development impact versus doing investments guided by whatever the national security priority of the moment is, and the two aren’t the same,” said Clemence Landers, a policy fellow with the Center for Global Development in Washington.

“What I'm seeing of the DFC is the national security component is very present.”

Traditionally, development finance is geared toward supporting companies with a social mission, getting capital to firms in emerging markets that might otherwise have trouble securing financing. The DFC’s recent investments include funding for storage facilities in Kenya to support food security, a global clean water project and funding for education in low-income areas of India.

“There's been a skewing toward more national security areas. They’ve tried to counter that by highlighting their more development-focused projects, but in terms of volume of commitments, in terms of sheer volume of money, it does seem to be skewing more toward national security priorities and less toward development,” Savoy said.

Some development experts see the nuclear effort as one that could boost the economies of poorer countries while preventing China and Russia from having a stronghold over the nations whose power infrastructure they supply.

“There’s a strategic interest in not letting Russia or China lock up the global advanced nuclear market, in part because some of these deals come with very long fuel agreements,” said Todd Moss, executive director of Energy for Growth Hub.

Some of those agreements lock countries into buying their nuclear fuels from Russia for upward of 30 years after they install the reactor.

“If Russia or another country has meaningful control over another country’s power system, that's incredible diplomatic leverage. We’ve seen how Russia is behaving with natural gas in Europe — imagine how they would behave with U.S. allies and advanced nuclear.”

Moss’s organization is technology neutral. Their goal is to ensure developing countries have the electricity they need to grow industry and jobs in places held back by intermittent power generation.

Moss said nuclear power in developing countries would have to be cost competitive to be worth the investment.

He’s excited by developments in small modular reactors, a sort of mini nuclear reactor that can be prefabricated and assembled on site, reducing costs while the small size allows countries to install as much carbon-free power as they need without overwhelming their system. That’s one kind of project the Nuclear Fuels Working Group is pushing.

He sees potential for that technology, even in poorer countries, where demand for electricity is expected to surge. But because the technology is not yet commercially available, it's not clear whether advanced nuclear will be affordable in developing countries where power bills can run just a few dollars a month.

Getting nuclear projects off the ground requires significant capital, and the investments can prove risky. Several nuclear reactors in the U.S. have been bailed out by state governments as they struggle to compete with less expensive renewables and natural gas.

But a rebirth in the U.S. nuclear market could be a boon to American uranium miners who have struggled amid a decade of low prices and stiff international competition.

Of the countries that have expressed interest in nuclear power, a few are the poorer ones DFC typically targets, though Moss said investments would more likely start in slightly wealthier nations.

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“DFC should be focusing as much as possible down the income spectrum,” Moss said.

“But the first mover effect has some benefits,” he said. “If it develops the sector to where those models end up in Kenya or Senegal, then there's a precedent here. ... You're trying to help develop the technology and the market so that it would become applicable in other countries.”

Savoy said the newness of the DFC might have many people eyeing it for pet projects that would otherwise be outside the scope of traditional development financing.

“DFC is the shiny new toy, so everyone kind of wants to use it; everyone kind of wants to think about how it could address your ‘pet rock’ issue of the day,” he said. “My sense would be there are relatively few countries where DFC should be making its investments where nuclear makes sense in short or medium term.”

But with $60 billion in funds, Moss said the agency could take a partial stake in a few nuclear projects without sacrificing other interests.

“We're not anywhere close to a zero-sum game of one project taking away another,” he said.