The subtask on "External Costs of the Nuclear Fuel Cycle and the Risk of Nuclear Weapons Proliferation" addresses an issue that has been neglected in the debate on external cost of energy so far. To assess the general significance and range of the proliferation issue, the study provides an overview on its (technical) features, and on international non-proliferation regimes and policies. Two case studies on recent experiences with Iraq's and North Korea's nuclear activities illustrate that there are many different ways for determined nations to proliferate and for the international regime to deal with their proliferation potential. Based on an extensive literature review it becomes evident that there is a considerable risk of nuclear proliferation in the post-Cold War period. It should therefore be considered in energy planning and decisions on energy policy, i.e. in assessments of the nuclear fuel cycle.

For the integration of the risk of proliferation into the ExternE accounting framework three approaches are discussed: * a simple expected utility estimate, * a scenario approach considering the problem of regional hot spots, and * an abatement cost approach. Yet, uncertainties and unknowns are in the nature and complexity of the proliferation problem. It does not only have a technological, but also military-strategic, political, social, and economic dimensions. Both, damage estimates and probability assessment, can easily differ by orders of magnitude depending on the assumptions and judgements made and the approach chosen. Thus, it does not seem appropriate to apply a monocriterion analysis, even though costs is an important criterion in political decision making. The development and application of a multi-dimensional assessment scheme (as e.g. in multi criteria analysis or integrated environmental assessment) is suggested to deal with this kind of problems in the future.