How can Europe fund its space ambitions?

3414


Europe is lagging behind in the space economy, and member states are calling for more public and private investment to remain competitive with global players – but challenges remain for the next Commission mandate and the sector first needs a new strategy to attract investors.

ADVERTISEMENT

Following a profound transformation of the space industry over the last decade, the European model, based mainly on public support, has become obsolete in an emerging economy where the US, China and India are thriving.  

“This model is no longer adequate for today’s global, competitive space economy,” says the EU’s latest report on the single market, by former Italian president Enrico Letta.  

Most industrial resources are now concentrated in a few countries and companies with the capacity to build, launch and operate large space systems, which hinders growth and fragments Europe’s potential in the global market.     

“We are far behind the others and should not spend so much time trying to mimic what is already on the market in terms of technologies,” Reinhilde Veugelers, senior fellow at Brussels-based economic think tank Bruegel told Euronews.   

“Europe needs to make sure that it has a well-functioning innovation system, because there are a lot of inventions that are not just dedicated to space, but come from other technologies,” she added.  

According to Letta, if Europe wants to compete and achieve strategic autonomy, it needs to stimulate the injection of private capital, introduce common rules and balance the distribution of funds between different space activities and countries.  

‘Divide and rule’ not applicable

Until now, the European Space Agency (ESA), which is made up of most EU countries plus Canada, Norway, Switzerland and the United Kingdom, has operated on the principle that any investment made by a member is reciprocated proportionally through contracts with its national industry.  

An approach that has worked well for space exploration but may not be the best for commercial space. 

“We need the best long-term outcomes here, and whoever can deliver them should get them,” argues Veugelers.   

If this is done through consortia of several European companies of different sizes and expertise, so much the better. 

“With our procurement, we in Europe should definitely avoid ending up in a war where we each subsidise our own players,” says the Bruegel researcher.   

Instead of dividing efforts by retreating to the national level, a joint boost could be a better way forward for the European space economy.  

“[To grow], we may have to think about cooperative models and the so-called risk-sharing sector, which may not be as profitable, but would allow Europe to have its independent access to space and be competitive outside Europe,” Xavier Llairó, co-founder of Pangea Aerospace, which develops rocket engines, told Euronews.   

Speed up the game

For ESA director general Josef Aschbacher, working on agile procurement procedures should be part of Europe’s recipe for success in the coming years.  

“This is something that worries me, [the fact] that Europe is not at the same speed and volume in attracting funding,” Aschbacher told Euronews during the recent space ministers’ meeting in Brussels.   

ESA’s agenda for 2025 reflects these concerns, with commercialisation and attracting capital to the industry at the top of the list.   

“For me, you need three ingredients to succeed: a good idea, access to money and speed,” Aschbacher argued, adding that Europe already has the skills and talent.  

However, the sector has traditionally been risk-averse and has not been able to attract financial instruments.   

ADVERTISEMENT

“We don’t want to crowd out private investors. We would like to boost where necessary,” says Helmut von Glasenapp, Secretary General of the Association of European Association of Long-Term Investors (ELTI), which represents public investors such as national promotional development banks and other financial institutions.   

But in general, only a few of these public investors have been asked by their shareholders to include both defence and space or both excluded from in their mandate. 

“Governments need to say what they want, and the second step is who should do it,” von Glasenapp stressed.  

Focus on your strengths

Europe’s access to space is temporarily being provided by Elon Musk’s SpaceX, one of the world’s most profitable start-ups, which currently leads the global market for launch services.    

The company is currently discussing the sale of existing shares in a deal that could value it at around $200bn [183.94bn], according to Bloomberg.  

ADVERTISEMENT

“This is a company that can raise between one and two million euros a year from private investors, so we are talking about a different scale,” Llairó said, stressing that he thinks Europe is already late for these larger-scale projects.    

But as space is a sector where technology is linked to profitability, the bloc could instead focus on developing efficient engines at an affordable and competitive price, he says. There, public investment could support the development of the core of the launchers, the engines, and then private investment could help scale up the rest.    

The Bruegel researcher also sees scope in space manufacturing, where small and medium-sized enterprises can play a key role in European and international supply chains.    

“With some vision and the development of the right tools, I believe we can get back into the global race,” forecasts Llairó.  



Source link