FRAMEWORK and OUTLOOK of the SPANISH SPACE SECTOR Alicia Richart Ramón, Mechanical Engineer N O L L I U G

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21/10/2014 Nº 176 ECONOMICS FRAMEWORK AND OUTLOOK OF THE SPANISH SPACE SECTOR Alicia Richart Ramón, Mechanical Engineer N O L L I U G

M J - G S C

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© 1. The Importance of the Space Sector November 15, 2014 marks the 40th anniversary of the launch of the first Spanish satellite, with the sector facing a very worrying future. In these years, the Spanish re - search and space industry has managed to play an important role in the develop - ment of the European and global space sector. The Spain brand embarked on all European research missions of the universe, of solar system exploration, for exam - ple, Mercury, Venus, Mars, the Moon, Saturn, comet docking, and even on the Cu - riosity Rover, the most ambitious NASA mission to explore Mars. Our industry participated in important teams of the International Space Station and on ATVs for re - supply. It was also part of consortia which successfully competed in the commercial market for communications and Earth observation satellites and rocket launchers, all of them high-tech export activities of large international and economic implications for our country and for the prestige of our industry.

The space sector today provides services worldwide without which our society would not operate properly: if satellites should be silenced, world economy would col - lapse. Developed countries ensure the proper functioning of these services for the wel - fare of its citizens and to protect their interests, and developing countries are implementing them to ensure their growth.

However, the inter-ministerial meeting of the European Space Agency (ESA) of No - vember 2012 was held in a very serious situation due to the non-payment of manda - tory dues to the Agency by the previous government. This, coupled with the economic crisis, has forced the current government to reduce 75% of Spanish participation in optional programs, which has placed Spain in a very difficult situation in the ESA with serious problems for its industry. Spain, therefore, should recover the position it de - serves given its economic, technological and social level in Europe.

2 A country having space capacity has a key tool for the future, due to the follow - ing reasons:

Engine of Growth Space systems provide ground services that improve the quality of life and se - curity of citizens, with a very positive effect on the economy of the countries which have them, creating wealth and generating jobs. The space sector is fo - cused on the civil, defence and trade industry. It comprises the design and man - ufacturing of launchers, communications satellites and Earth observation satellites.

Political Tool Countries that have a Space Program have an important tool of international policy that, without major economic efforts, can provide significant results. The recent crisis in Crimea provides evidence of the importance of the space sec - tor in international conflicts. The economic and political sanctions that the US is applying to Russia, specifically exclude any action that could affect its coop - eration agreements on the International Space Station. This cooperation path remains open despite the crisis that these two countries are facing, preventing relations among them from breaking.

G8 countries consider that the space sector is State policy; their political par - ties include it in their programs and it is part of the agenda in bilateral confer - ences. Bilateral space cooperation agreements between countries (France, Germany, Italy, and the UK with the USA) are constantly being signed.

Environmental Protection Mechanism The Earth is set in an environment that is subject to physical phenomena caused by the sun, cosmic radiation, meteorites, asteroids, etc., the effects of which may have a great economic impact on power distribution systems and communica - tions, which could sometimes be appalling for our ecosystem and for human life.

3 Concerned about this situation, developed countries are taking steps to recog - nise, assess and monitor these phenomena trying to anticipate as far as possi - ble their effects through multinational programs such as 'Space Weather' or 'Space Situational Awareness' (SSA). The strength of a country is measured in - ternationally in terms of what it can contribute to this type of programs.

Inexhaustible Source of Resources The future may hold transcendent discoveries for humanity related to energy and new materials. There are currently ongoing institutional and private initia - tives that are exploring our close space environment and trying to discover new resources through research programs.

• New energy sources. In the interstellar space where the Earth is, there is a constant and massive flow of high-energy particles that could be used as en - ergy sources if we had the necessary technology.

• Space mining. Meteorites made of metal compounds have recently been dis - covered, the properties of which are very different from those that can be found on Earth because their formation could have taken place in stars or in space conditions impossible to get on the Earth. The capture of asteroids to industrially use its compounds is an activity that is beginning to take shape with private initiatives in the USA. Space mining is yet in its infancy, but it could be an interesting economic activity in the future and will be exploited by those who have the appropriate means.

We are thus before a strategic sector, as space activity affects the sovereignty, security and economy of a country.

4 2. Current Sector Situation in the World

Globally, three distinct periods in the evolution of the sector can be distinguished.

FIGURE 1. Space sector evolution

Initial period 1957: launch of Sputnik It features a strong political motivation - 1972: last mission of the two superpowers, where companies to the Moon have everything they need to succeed. by Apollo 17 The goal was to win the space race. The industry develops easily and without financial problems.

Industrial 1973 – 1999 Political interest declines significantly development and governments focus their efforts on consolidating the industry through important institutional projects, applying an active industrial policy based on mergers and acquisitions to get 'Champions' capable of facing international competition in this emerging market.

Industry 1999 – 2012 Institutions start to grant prominence consolidation to the industry which is fighting hard in the commercial market. The crisis, which particularly affects institutional programs in developed countries, promotes the entry of new companies and emerging countries in the space market.

Source: Prepared by the author

5 The space sector moves 195 billion euros worldwide. In response to market demand for services, the space sector is often divided between:

• Institutional market: Defence and Civil Space applications. • Commercial market: Activity for the commercial exploitation of satellites and launchers.

FIGURE 2. Value chain

Space industry: Launchers M • Builds and launches the satellites A

E 2,200 M €

R • Operates satellites from the ground T

S Satellites P • 20 companies compete in this global market. In U 2,400 M € Europe: Astrium, TAS, Arianespace.

• They purchase and operate satellites Satellite Operators for communications, broadcasting, navigation… 14,000 M € • 50 companies worldwide. In Europe: SES, Eutelsat, Hispasat, Inmarsat…

Terminal manufacturers: M

A Equipment E

R • Suppliers of equipment

T Terminal Manufacturers S

N 40,000 M € • 100 companies W

O • VSAT, TVRO, Teleport… D

Services: End Users Fixed and mobile services • Fixed and mobile 65,600 M € • Voice and data communication • TV broadcasting (55,000 M €)

Source: Prepared by the author

6 Considering the value chain generated by the commercial activity, it is usually divided into:

• Upstream. It is the actual space sector and includes the development, con - struction and launching of satellites. Technologically speaking, it is very de - manding and requires an investment of around 12% in R&D. The main area of research focuses on launchers and on geostationary satellites that will evolve to higher orbits. It is mainly comprised of suppliers of space subsystems, com - ponents, systems integrators, in addition to monitoring operations carried out from the ground. There are few companies involved worldwide in the upstream value chain and, therefore, it is where greater institutional investment takes place: 95% of institutional activity is done here. The pyramid shows how any in - vestment in upstream R&D has a multiplier effect of 3 on the next step of satel - lite operators, and of 6 in the equipments part.

• Downstream . It refers to the commercial exploitation of terrestrial services pro - vided by satellites. It includes the operation, services and supply of commercial equipment to the end customer. It comprises the following strata:

1. Satellite operators. It is currently dominated by satellite TV suppliers that rent satellite 'transponders' and exploit LEO constellations dedicated to mobile communications. There are two satellite operating companies in Spain: His - pasat, for the commercial market, and Hisdesat for government applications. Worldwide, there are around fifty companies: SES, Inmarsat, etc. Perhaps the most significant example in this field is meteorological satellite observation, which is already part of our daily life and without which a modern society could not be conceived.

7 2. Terminal manufacturers. There are about a hundred companies that manu - facture ground stations for various uses (VSAT, TVRO, teleport, etc.).

3. End users. It is the key part of commercial exploitation. TV services (Direct to Home and Broadcasting) can be highlighted, which have grown significantly in recent years. Broadband use (Internet) is virtually non-existent at the moment. Expected growth in mobility services for both voice and especially data should not be forgotten. Providing access to the Internet and achieving 100% of high speed coverage (Broadband) is possible using satellite capacity.

FIGURE 3. Summary of global market size

WORLD SPACE ACTIVITY INSTITUTIONAL COMMERCIAL TOTAL Data 2012 (M €) USA Europe Rest of the world TOTAL 1. Upstream 50,000 9,300 11,500 70,800 4,600 75,400 Civil 15,400 7,700 9,200 32,300 4,600 36,900 Defence 34,600 1,600 2,300 38,500 0 38,500 2. Downstream 119,600 119,600 Operators 14,000 14,000 Ground equipment 40,000 40,000 Users 65,600 65,600 Total market size 70,800 124,200 195,000

Fuente: Eurospace

The global crisis is affecting the institutional part of the space sector, which needs to cut costs without terminating their services; however, the commercial sector (mainly downstream: operators, ground equipment and users) continues to grow.

8 FIGURE 4. Present situation and outlook of the sector

PRESENT FORECAST

t The US transfers some functions to the private sector Civil activity will have a growing importance to provide better services in security e k r (i.e. launchers and telecommunications), through and standard of living of citizens. a M

medium-term service contracts, which is enabling new In Europe this will mainly be provided by the ESA, which has proven to be very l a

n highly-competitive businesses into the space sector. In efficient for its member countries and their industry. o i t Europe the effort is being sustained in general terms; Defence activity, mainly based on Telecommunications and Graphics, will u t i

t some countries with economic difficulties (including Spain) continue for strategic reasons; each country will design its services according s n I have reduced their space budgets, and others such as the to its needs and possibilities. UK and Belgium have increased their efforts taking The trend followed by the Administration is to outsource most services to advantage of the situation to improve their position in the private companies, and collaborate with other countries to build systems, space sector. sharing services and costs.

t Launchers

e 2013 was a good year for the commercial sector, with k r Europe remains world leader, with over 50% of commercial launches with the

a the procurement of 31 satellites and 34 launchers. M

Ariane 5, the most reliable on the market. Lately, new launchers with very

l Reasons: a i competitive prices have been released which could complicate the future of this c • Increased space activity by developing countries, r e and emerging countries in Asia, Africa and Latin launcher. m

m America, who are acquiring space systems, aware of The positions of France and Germany are far from converging, and the ESA itself o C their importance for their social and economic is unable to agree on a reference framework. development. At the moment, for the sake of competitiveness, the ESA is introducing the new • The replacement of satellites (approximately 180 in Ariane 6 based on the cooperation of five countries (France, Germany, Italy, geostationary service), ever-growing in number, Belgium and Switzerland) and 50 companies (currently 150). The approval of the nearing the end of their useful life. This is something final development program is expected for the next ministerial meeting that provides stability to the sector. (December 2014), but everything suggests that it will not be easy. • Japan, India and China have broken into the space sector with very aggressive competitive strategies of Telecommunications satellites and launchers, and in particular for The situation is now more open with many opportunities on the horizon, where developing countries with which they have wider technology will be a key element. agreements. The great challenge of the space sector is to integrate itself in the Internet, this will enable it to develop new applications and services. An example of these This market is dominated by the services of Direct TV applications can be broadband services for aircrafts, specific Internet DHT (Direct Home TV) and Broadcasting (DBS), and applications, e.g. cache satellites, security bypass, etc. broadband (Internet) is almost non-existent for Satellite introduction in the Internet's global network is a great opportunity for technological and economic reasons the future of the space sector (‘Up/Downstream’), especially for companies with the technological capability to participate in this important commercial market with billions of users.

Source: Prepared by the author

9 “Spain should recover the position it deserves given its economic, technological and social level in Europe. A country having space capacity has a key tool for the future”

3. European Union Situation

The European Union, initially with hardly any space activity, is seeking to acquire a growing role in space policy. It is currently acting as a coordinator of the interests of European users in civil space systems. The activity has been delegated since May 2004 to the European Space Agency (ESA). This deal has materialised with the creation of a Space Council which brings together representatives of the EU Council and the Council of the European Space Agency.

Important space projects, by their sheer magnitude, generally fall outside the scope of a single country and are addressed collaboratively. To do this, Europe has its own Space Agency, which handles 70% of institutional investment in civil space in Europe, having achieved outstanding successes throughout its history and tech - nological breakthroughs of the participating companies.

The activity of the ESA is based on the collaboration between its member coun - tries which finance the programs and which are entitled to receive industrial re - turns in terms of their contribution. The programs may be mandatory depending on their GD P, optional or 'à la carte'.

Figure 5 shows that 80% of the budget is allocated to optional programs (45% institutional and 35% commercial). Satellite launchers, astronaut programs, Galileo development program and telecommunications are the strategic areas of this sector.

10 FIGURE 5. Description of ESA programs

PROGRAMS DESCRIPTION BUDGET Compulsory Scientific Program for the Research of the Universe 20% General Program for the development of general technologies

Optional Civil programs of public interest in Earth Observation areas 45% Institutional (Meteorology, Oceanography, Geodesy, Environment and Security) Robotic exploration of the Solar System Exploitation of the Navigation Space Station SSA Development of specific technology for these programs (GSTP)

Optional Telecommunications and Launchers Programs aimed 35% Commercial at maintaining and improving the competitiveness of the European industry in the international market

Source: Prepared by the author

In addition to participating in the ESA, countries with a well-established space industry organise all their activities through their National Space Program and have their own Space Agency which coordinates their institutions and resources and represents their country with a high international standing.

ESA Ministerial Conference

The Council is the governing body of the ESA, establishing its basic guidelines. All member states are represented on the Council and are entitled to vote.

The ministerial conference, where programs presented by the ESA for the next four years are approved, is held every four years. The delegations of each country, chaired by the relevant minister, sign their participation in the various programs. The Conferences decide on:

11 “Countries that have a Space Program have an important tool of international policy that, without major economic efforts, can provide significant results”

• The continuity of programs. • The approval of new programs. • The budget plan of the member states' multi-annual financial commitments.

All member states participate in mandatory programs with a contribution pro - portional to their GDP (in our case, 8.57% of total GDP). With regard to optional pro - grams, member states are free to decide their level of involvement.

At the last Ministerial Conference in Naples of December 2012, and despite the crisis striking all countries, the 2008 budget remained. Some countries took the opportunity to improve their position by increasing their participation.

Among those who increased their participation in the optional programs is the UK, with an increase of 68%; and among those who decreased it is Spain, down 71%. It is striking that countries like Belgium, Switzerland, Norway or the Nether - lands, with a GDP much lower than ours, contribute more to ESA programs (Figures 6 and 7).

Thus, commercial activity has remained in most countries save in Spain, which could result in Spain's exit from the commercial sector. To alleviate it to some extent, the current government, through the Ministry of Industry, Energy and Tourism, has recently authorized a stable budget for national space indus - try until 2022.

12 FIGURE 6. Description of ESA member countries' contributions in 2008 and 2012

GDP 2011 MINISTERIAL 2008 MINISTERIAL 2012 REDUCTION INCREASE Billion $* Million € % Million € %% Germany 3,139 2,051 24% 1,693 20% 17% France 2,246 1,743 20% 1,327 15% 24% United Kingdom 2,290 399 5% 672 8% 68% Italy 1,871 977 11% 645 7% 34% Belgium 419 479 6% 439 5% 8% Switzerland 344 272 3% 231 3% 15% Norway 269 92 1.1% 143 2% 55% Netherlands 713 173 2.0% 122 1.4% 29% Spain 1,432 424 4.9% 122 1.4% 71% Austria 357 114 1.3% 100 1.2% 13% Sweden 387 141 1.6% 96 1.1% 32% Rumania 271 0 0.0% 82 0.9% 82% Luxembourg 42 37 0.4% 82 0.9% 121% Poland 782 0 0% 46 0.5% 46% Denmark 209 41 0.5% 34 0.4% 17% Finland 198 19 0.2% 31 0.4% 66% Ireland 184 25 0.3% 24 0.3% 2% Czech Republic 289 20 0.2% 24 0.3% 19% Canada 1,414 29 0.3% 18 0.2% 37% Portugal 252 16 0.2% 15 0.2% 5% TOTAL 8,635 8,662 0.3% COVERED 7,055 82% 5,948 69% PENDING 1,581 18% 2,714 31%

Source: European Space Agency *A billion dollars = one thousand million euros

13 FIGURE 7. Description of ESA member countries' contributions in 2008 and 2012

2.500 Commercial Institutional 2.000

1.500

1.000

500

0 8 2 8 2 8 8 2 8 2 8 2 8 2 2 0 1 0 1 0 12 0 1 0 1 0 1 0 1 8 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 y y e e ly y K K d d s s n n n n c c a al U U m m n n d d i i a a n n It It iu iu la la n n a pa m m ra ra lg lg r r la la Sp S er er F F e e ze ze r r G G B B it it he he w w et et S S N N

Source: European Space Agency

Furthermore, in the Industrialisation Agenda presented by the Ministry to the media in September 2013, the priority is triggering demand for industrial goods with a multiplier effect on the economy, including an increase of the ESA budget by including an enhance of investment in high-tech industries.

The government's commitment to the industry was seen this year when the Council of Ministers, at its meeting of July 18, authorised the modification of the spending limits that had previously been established by the Council of Ministers of September 20, 2013. This change involves a higher budgetary allocation for Spain's participation in European Space Programs in the coming years. Specifi -

14 “The ESA is a zero-sum game, what Spain doesn't get is obtained by other European countries. Spain must remain in the Agency as a reliable and stable partner” cally, it involves authorising an expenditure of 1,368 million euros, compared to 1,024,000 authorised in 2013.

The Ministry of Industry, Energy and Tourism suggests two actions with regard to the European Space Agency:

• Making an additional contribution of 500,000 euros in each of the years 2014 and 2015, with the aim of creating a Business Incubation Centre which would be called ESABIC Madrid, devoted to the development and operation of the in - struments of ESA’s scientific satellites.

• Consolidating the Spanish annual contribution to the European Space Agency of 152 million euros for the 2015-2022 period (at the 2013 Council of Ministers the contributions were lower), so that Spain reaches the appropriate level at the programs that the ESA is going to approve: developing new launchers, keeping the International Space Station running, making contributions and continuing pro - grams currently running, like courses on exploration, manned space flight, micro- gravity, Earth observation, telecommunications, technology and security.

Even considering that the adopted budget may be modest to successfully ad - dress the challenges and opportunities which would arise from the participation of our national space industry, it is certainly an important first step to face the com - ing years and underlines the government's commitment to this industry.

Finally, it is important to emphasise the need to attend the ministerial con - ferences having met our budget commitments and with a high-level representa -

15 tion consistent with the status of other representations (i.e., at ministerial level). The opposite could imply an erosion of Spain's image in Europe, which would ul - timately be excluded from the management of space programs. In this sense, the ESA is a zero-sum game, what Spain doesn't get is obtained by other European countries. All this would involve a standstill for the national space industry in the coming years.

Spain must remain in the Agency as a reliable and stable partner. This policy is the one that will provide the greatest long-term returns.

4. Situation in Spain Spain is a pioneer in space activities, having worked in them non-stop since the 60s. The NASA stations that followed the American ships to the moon in the 60s were in Spanish stations, and in 1974, the first Spanish satellite INTASAT was put into orbit.

Until the mid-80s, the incipient Spanish industry only had a marginal participation in ESA projects in collaboration with European industry consortia. But a restructur - ing of companies in Europe began in the second half of the 80s, consortia disap - peared and new Spanish companies were created in different areas of technology. National Space Programs started allocating a greater budget to space activity, trig - gering a period of growth in the sector.

Spain’s allocation to space activities is relatively small with regard to our GD P, ac - counting for 0.05%, but it is an extremely innovative industry, based on knowledge, precision, scientific and technological excellence, and in which about 12% of its over - all turnover is invested in R&D, well above the national average

16 FIGURE 8. Evolution of Spain’s contribution to the ESA vs sector revenues

PNOT 500 Industrial revenue Operators Revenue Contribution to the ESA 400 ? s

o 300 r u e n o i l l i

M 200

100

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: Centre for Industrial Technological Development (CDTI)

From the graph on the evolution of Spain’s contribution to the ESA as compared with the revenues of the industrial sector (see Figure 8), we can see that industrial revenues increased until 2012, but since that year a reduction is expected due to Spain's lower contribution to ESA programs.

The space sector, with a turnover of about 900 million euros a year, employs 3,262 people 1, most of them university graduates, especially engineers and highly skilled technicians. Another important feature is that the average age of this group is very young, with a high capability to work in multidisciplinary and international teams, plus it employs very high level standardised methodologies.

1 Proespacio Annual Report 2011.

17 “The space industry is clearly an exporting group, 66% of sales are made outside Spain. It is an activity with a high multiplier effect and return on investment, as explained by the value chain”

The space industry is clearly an exporting group, 66% of sales are made outside Spain and, of this figure, two-thirds are addressed to countries of the European Union. It is therefore an activity with a high multiplier effect and return on invest - ment, as explained by the value chain.

Space Activity in Spain Linked to the ESA

Space activity in Spain is mainly organised around the European Space Agency (ESA) of which our country is a founding member. Spain's contribution to the ESA was 202 million euros in 2011, equivalent to 5% of the total budget of the Agency and below what we should have contributed according to our GDP (8.57%). In 2012 it was 194 million euros, still a bit below. This figure represents most of our country's public re - sources devoted to space.

The management of this participation now lies in the Ministry of Industry, Energy and Tourism, which uses the CDTI (Centre for the Development of Industrial Tech - nology) under the Ministry of Economy and Competitiveness, as the implementing agency.

The turnover of the businesses and activity of Spanish scientists, as well as the evo - lution of the ESAC (European Space Astronomy Centre) strongly depend on the ESA. Spain is also one of the few countries with a 100% geo-return coefficient 2. However,

2 Geo-return or industrial return is an indicator measuring the hiring of the Spanish space industry regarding Spain's contribution to the ESA in the same period. That is, Spain has succeeded in having a recruitment higher than its contribution, which is certainly a positive aspect.

18 when the hiring of the Spanish industry in the ESA regarding our weight in Europe is analysed, we can see that our levels still do not reach 80%: that is, as a result of Spain's low historical contribution to the ESA, the Spanish industry can only access a level of recruitment which is far below its potential.

Bilateral Agreements and National Agencies

Another expansion possibility in the sector has been the signing of bilateral agree - ments between the CDTI, the Ministry of Foreign Affairs and various space agen - cies. Examples of these agreements are:

• With NASA, in projects to explore Mars.

• With the French CNES, defence agreements (Helios and Pleiades). Agreements which have never been subscribed in the field of civil enterprise.

• With the Russian agency Roscosmos, for thermal control systems.

• An agreement with the Canadian Space Agency, although no project has been carried out yet.

The rest of Spanish activity in the space sector is geared toward:

• Spanish commercial businesses as suppliers of commercial telecommunica - tion services . In the 90s, HISPASAT, the first Spanish satellite telecommunica - tions operator was created.

• Government/Military : HISDESAT was built to provide secure satellite telecom - munications. Currently, HISDESAT is serving government clients, Spanish and from third countries, to which it provides communications services for civil and military applications.

19 The high activity of these operators is reflected in the 14 satellites that are being operated.

National Defence Programs

Earth observation satellites: Helios and Pleiades (multinational) and Peace (national) and SEOSat/Ingenio, eligible to join the Copernicus initiative (formerly Global Moni - toring Environment Security) of the EU and the ESA, which involves industrial and sci - entific activity (Figure 10).

FIGURE 9. Spanish Satellites Launching year Name of satellite Mass (T) Manufacturer Launcher 1992 Hispasat 1A Astrium Ariane IV 1993 Hispasat 1B Astrium Ariane IV 2000 Hispasat 1C 3,100 kg Thales Atlas II 2002 Hispasat 1D 3,300 kg Thales Atlas II 2004 Amazonas 1 4,600 kg Astrium ILS Proton 2005 Xstar-Eur Loral 2006 SpainSat 3,700 kg Loral Ariane 5 2009 Amazonas 2 5,400 kg Astrium Ariane 5 2010 Hispasat 1E 5,300 kg Loral Ariane 5 2013 Amazonas 3 6,200 kg Loral Ariane 5 2014 Amazonas 4A 3,000 kg OSC Ariane 5 2014 Hispasat 1F Ariane 5 2015 Hispasat AG1 3,200 kg OHB 2016 Amazonas 4B OSC

Source: European Space Agency from CDTI data

20 FIGURE 10. Institutional programs addressed in Spain Launching year Name of satellite Mass (T) Manufacturer Launcher 1974 Intasat Ionospheric beacon 25 kg HSD Delta 1997 Minisat 01 Scientific 200 kg Ball Aerospace Pegasus Seosat Ingenio Optical Astrium Seosar Paz Radar 1.400 kg Astrium

Source: European Space Agency from CDTI data

Space activity requires ground support infrastructure, and our country is home to a significant percentage (Figure 11).

In the 70s, INTA, dependent on the Ministry of Defence, was responsible for the space program on a very tight budget and also for the Administration's represen - tation in international organisations (ESA, Eumetsat, etc.).

In the mid-80s, the government decided to shift responsibility for space pro - grams to the Ministry of Industry (CDTI). Thereafter, the CDTI was responsible for the activity and it drafted a National Space Program (NSP) with which Spain acquired weight in the European space sector. Thus, Spain's participation in op - tional ESA projects, the scientific research of space (international scientific con - sortia) and the ability to participate in bilateral programs with other countries, increased. This situation, positive for the industry and the sector, is not efficient nation-wide, as other space-related programs and activities regarding scientific, defence, environment, and navigation research, etc. are excluded from their man - agement.

21 FIGURE 11. Space facilities in Spain Facility Agency Town Description

ESAC ESA Villanueva It is one of the five ESA facilities. Responsible for science operations of all ESA de la astronomy and planetary missions and for the receiving and processing of Cañada satellite data from Earth observation and SMOS. The Centre also houses the project team of the new Space Situational Awareness program (SSA) of the ESA and the Centre for Fundamental Physics CAB-LAEFF of the INTA with 16 nationalities, with a high percentage of engineers and scientists of the highest level.

EU Satellite UE Torrejón Processing of satellite imagery. Reports to the EU High Representative for Centre de Ardoz Common Security.

Centre for INTA Torrejón Studies the characteristics of life and the possibilities of its development in Astrobiology de Ardoz non-terrestrial environments. Collaborates with NASA.

Madrid Deep Space NASA Robledo It is the only NASA facility in Spain, in collaboration with INTA. Communications de Chavela Complex (MDSCC)

Hispasat Control HISPASAT Arganda Opened in 1992. Performs supervision and control of satellites from the ground Centre del Rey in extreme reliability conditions the 24 hours.

Canary Islands INTA Maspalomas Satellite tracking. Space Centre

Cebreros Centre ESA Ávila Deep Space Satellite Tracking Station of Cebreros (DSA 2).

Source: European Space Agency from CDTI data

In 2008, the government decided to transfer the CDTI to the Ministry of Science and Innovation and with it, the management of space projects, but budgets and rep - resentation at international organisations (ESA) remained at the Ministry of In - dustry. This dichotomy of responsibilities has weakened the space sector both due to the lack of authority on who must manage space programs (CDTI), and to the role of the Minister of Industry, whose important task of developing and implementing

22 an industrial policy disappeared, limited only to the representation and adminis - tration of funds.

FIGURE 12. Institutional complexity

EUROPEAN OTHER ESA DGAs EUMETSAT COMMISSION COUNTRIES

Ministry of Agriculture, Food and Ministry of Environment Defence Ministry • AEMET Ministry of of Public • INTA • Eumetsat Works Industry, • DGAM Ministry of Energy and • AENA Economy and Tourism • Galileo Competitiveness • SGI • OPIs • ESA • CDTI • Bilateral • Major facilities • PNE • CE • SGI Management

Source: Centre for Industrial Technological Development (CDTI)

23 “The space sector today provides services worldwide without which our society would not operate properly: if the satellites should be silenced, world economy would collapse”

At present, the Ministry of Economy incorporates the CDTI and keeps the Min - istry of Industry with the same representation and funds administration tasks, so institutional complexity has increased even further. The result of these shortcom - ings is that the latest Strategic Plan for the Space Sector for the period 2007- 2011 has expired without having prepared at least a continuity plan (Figure 12).

2. Proposals The space sector is not a subsidised sector; it is a productive sector that provides serv - ices necessary for citizens in developed countries.

Spain has achieved a high level of respectability in the international space industry, but in recent years we have lost future opportunities as we have been systematically excluded from important competitions in the ESA, and industrial consortia discard Spanish companies due to the decrease of State contributions.

A. The most urgent proposal is related to the fact that, this year, there is a key milestone for the space industry in general and Spain in particular. This is the 2014 Inter-ministerial Conference of the ESA, in which it is absolutely neces - sary to show that our commitment as a country and founding partner is firm and reliable.

It would therefore be beneficial to have representation at the highest ministerial level and, at the same time, adjust our budgetary contribution to our country's GDP in the European Union. This way, we would have the opportunity to recover Spain's

24 role in the compulsory and optional programs. Likewise, introducing a public-private partnership mechanism to strengthen the position of our industry in the ESA, is also an option. It should be recalled that State contributions yield a return and are multiplied by the projects in which it participates, so every euro invested becomes 3 in upstream and 26 downstream.

As noted, the space sector has high prospects of both organic growth, due to the incorporation of new countries and customers, and of new uses arising from these technologies which will generate multiple services. Therefore, it would be a shame to miss this opportunity, perhaps the last.

In 2013, the first effects of Spain's budget cut in the ESA's allocation were al - ready experienced. Thus, the volume of new projects hired drags a return deficit of three million euros, and this will entail a standstill in the coming years.

Another matter of concern is that Spanish companies are told to refrain from bid - ding on new contracts due to the rule of fair return, after reducing our participation in ESA programs. If this issue is not solved soon, damage to our space industry could be irreversible and competitors from other countries will take our place.

However, despite the panorama drawn, the Spanish industry is largely hopeful that the government will react soon and return to former levels of investment. Consolidating the Spanish contribution is an important first step.

B. We are facing a good opportunity to rethink the needs of Spain when defining space policy for the coming years.

The space sector, although not of great importance economically, has a number of connotations that inevitably affects the administration, both in its capacity as a nat - ural user through its institutional services, as in its responsibility to get the best re - turn for domestic industry and promote the jobs that this activity may involve. It is

25 “The government is set to consolidate the Spanish annual contribution to the European Space Agency at 152 million euros for the 2015-2022 period”

therefore necessary to design an efficient space strategy according to the needs and interests of our country.

A series of proposals that would help structure the sector and provide it with the mo - mentum necessary to become a major player again are shown below:

1. Grouping together space activities which today lie scattered in the Central Government Concentrating all activities of the space sector, scattered today in various min - istries, i.e. efficiently reorganising the administration under a single authority. This reorganisation does not pursue increased spending, on the contrary, it should seek self-sustainability with proceeds from its activity.

2. High commissioner as representation for space matters Appointing a high commissioner to represent Spain in all high-level institutional meetings and which is able to group together multiple approaches in this sec - tor: civil, security or defence, scientific and commercial.

3. Strategic National Plan for long-term space industry Designing a long-term National Strategic Plan (5-10 years), beyond the electoral cycle, and which considers the objectives and priorities of matters of defence and security, as well as civil, scientific and technological and services matters.

4. Boosting relations with other countries The aim is to really use the space as a foreign policy tool, in addition to ex - panding the market for our industry. To do this, we must strengthen existing re -

26 FIGURE 13. Framework of tractor Ministries and User Ministries

Tractor Ministries User Ministries

Ministry of Defence Ministry of Foreign Affairs and Cooperation ++

Ministry of Economy and Ministry of Agriculture, Competitiveness Food and Environment ++

Ministry of Industry, Ministry of Education, Energy and Tourism Culture and Sports

lationships with major space agencies, seek new alliances with other countries and finally regain leadership in the ESA.

a. – Boosting current programs with the NASA and CNES. – Renewing and strengthening the fruitful relationships that we had in the past with the world's most important space agencies such as the NASA and CNES.

b. – Boosting relationships with other partners. – Identifying countries with which, for reasons of defence and security, we could forge alliances to work with them.

27 “The space sector is a productive sector that provides services necessary for citizens in developed countries”

c. – Consolidating our relationship with the ESA. – If Spain should increase its budget in the ESA, reaching a value corre - sponding to its GDP in the European Union, it could: • Give continuity to programs in which Spain has been investing. • Participate in new optional programs that are key to the future of the sector in Spain.

5. Collaboration and strengthening of national industries • Promoting the national industry . This is a sector that is characterised by ac - curacy and thoroughness. Moreover, it is a sector that evolves technologically very fast, so any slowdown or decrease in activity means losing many years of competitiveness. Increasing the talent that meets all these requirements is investing in the future of Spain.

• Promoting the international image of the Spanish space industry in the com - mercial sector through global cooperation agreements with international com - panies and institutions.

28 Glossary of Terms

Apolo 17. It was a NASA mission sent into care of their launch, operation and delivery of space on December 7, 1972 by a Saturn V roc - data to end-users. ket from launch pad 39A at Cape Canaveral Galileo. It is a global navigation satellite system complex. (GNSS) developed by the European Union (EU) Ariane 5. The Ariane 5 is a single-use rocket de - in order to avoid dependence on GPS and GLO - signed to place satellites in geostationary orbit NASS. and send loads at low orbits. It began to take GEOSS. A system for Earth observation, it cons - shape in 1984 commissioned by the European truction period is planned for 2005-2015. GsEOSS Space Agency (ESA) to EADS SPACE Transporta - aims to connect environment data with tools for tion as prime contractor. decision support and with end-users. Atlas V. The Atlas V is an expendable rocket GMES. Global Monitoring Environment Security . built by Lockheed Martin and Boeing. The current name of the program is Copernicus. CNES-Centre National d’Études Spatiales. It is ISS. International Space Station. a French State Agency in charge of developing the space sector. It has its headquarters in SatCom. ESA Communication satellites. Paris and was founded in 1961. Sputnik. The Sputnik program was a series of unmanned space missions launched by the So - EUMETSAT. Organisation incorporated in 1983, viet Union in the late 1950s. it aims to establish, maintain and exploit Euro - pean meteorological satellite systems, taking SSA. Space Situational Awareness .

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