How Europe Can Take Advantage of the $1 Trillion Space Opportunity
If you want to get an idea of how fast the global space sector is growing, consider one standard of measurement. Consider that in 2021, the bandwidth at which data gathered by satellites could be used here on Earth was 2.7 terabytes per second – which isn’t slow. This year, that hit 48 terabytes a second. In two years, then, an increase of 1,677.78 percent.
Or (if dollars and cents are more your language) consider that in 2010, the world space market was worth $280 billion. Today, it’s worth about $447 billion. And, according to Morgan Stanley, that number could more than double, to $1 trillion, by 2040.
That large number is just a small indication of how important the space sector is becoming. And we can be sure the US and China are taking advantage. Both countries – the undisputed space superpowers of our day – are investing heavily in their space ecosystems, pushing for more innovation, inspiring competition and sending satellites into space with a dizzying frequency. They rightly see that space in the 21st century means not just economic growth. It also means soft power and military might. In a divisive time, with bloody conflict underway, these imperatives are difficult to forget.
Where is Europe in all this? Not nowhere, by any means. Europe has established itself already as a world leader in a number of key space fields: low-Earth observation, AI-powered climate tech, broadcasting. And yet, because of the quirks of the continent, European businesses can struggle to scale. Linguistic, legal and cultural fragmentation make the continental markets and law hard to navigate, and capital difficult to access. And across the continent, there is less healthy competition, in the fires of which inefficiencies tend to burn away, increasing overall quality.
This is unsurprising. Unlike the US, China or India, Europe is not a country, but a continent. There is no single control center, from which all activities and operations can be coordinated. And there is enormous diversity between societies which, by and large, is rightly respected. A great deal of the burden of harnessing this diversity, which is the root of Europe’s enormous innovation, and directing it into something ‘European’ falls on those entities who have been empowered to speak, as it were, on behalf of the continent. These include, for 27 countries, the European Union, but also the European Space Agency (ESA), a 22-member intergovernmental body headquartered in Paris and devoted to space.
This brings politics into the equation, and it’s due to political dynamics that ESA has historically focused on industrial policy – shaping the economy by targeting specific industries, firms, or economic activities – and geographical return. In other words, in the form of industrial contracts, it has given back to its investors whatever they have invested in it. There is, of course, plenty of value in this. But the approach has taken the place of more strategic continent-wide space sector development, which is precisely what’s needed now for Europe to compete in this key global arena.
There are signs that ESA may be evolving its current policy. At a meeting in Seville, Spain, as part of the European Space Summit, ESA’s 22 members endorsed a resolution directing the agency to take the first step in an effort modeled on NASA’s Commercial Orbital Transportation Services (COTS) programme. This would see European companies developing vehicles for cargo transport to the ISS and potentially future space stations.
In a nutshell, this will involve European companies competing for lucrative contracts. Previously, ESA would retain ownership and closely dictate project specifications. This new approach is much more commercial, used successfully since the 1990s by NASA, and also used by the Space Development Agency. And companies have already responded. Rocket Factory Augsburg, for example, has announced it is working on a small launch vehicle.
Is this the future of European space? Perhaps. What’s certain is that for Europe to thrive and take advantage of the $1 trillion space opportunity, it needs to create conditions in which companies can compete, drive up equality, shed inefficiencies, and motivate each other to be better. If it succeeds in doing this, and the signs are positive, then Europe can be a major player in space globally – ‘on a high level with the USA with China’, as Walther Pelzer, director-general of the German Space Agency, has said is a legitimate goal for Europe in the long run.
That’s an exciting prospect.
Bogdan Gogulan is CEO at NewSpace Capital
The views expressed in this article are those of the author and do not necessarily reflect the views of AlphaWeek or its publisher, The Sortino Group
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