External costs of energy-do the answers match the questions? Looking back at 10 years of ExternE

While the claim for 'getting prices right' is quite popular in conceptual policy papers, the implementation of appropriate internalisation strategies is still hampered by a lack of reliable external cost data. Great expectations were set into the ExternE project, a major research programme launched by the European Commission at the beginning of the 1990s to provide a scientific basis for the quantification of energy related externalities and to give guidance supporting the design of internalisation measures. After more than a decade of research, the ExternE label became a well recognised standard source for external cost data. Looking back into the ExternE history, the paper pursues how emerging new scientific insights and changing background assumptions affected external cost estimates and related recommendations to policy over time. Based on ExternE results, the usefulness and inherent limitations of external cost estimates for impact categories like climate change or nuclear waste disposal is discussed. The paper also gives examples on how external costs in spite of remaining uncertainties are successfully used to support environmental policy. (C) 2002 Elsevier Science Ltd. All rights reserved.