The Future of the European Space Sector How to Leverage Europe’S Technological Leadership and Boost Investments for Space Ventures
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The future of the European space sector How to leverage Europe’s technological leadership and boost investments for space ventures The future of the European space sector How to leverage Europe’s technological leadership and boost investments for space ventures Prepared for: The European Commission By: Innovation Finance Advisory in collaboration with the European Investment Advisory Hub, part of the European Investment Bank’s advisory services Authors: Alessandro de Concini, Jaroslav Toth Supervisor: Shiva Dustdar Contact: [email protected] Consultancy support: SpaceTec Partners © European Investment Bank, 2019. All rights reserved. All questions on rights and licensing should be addressed to [email protected] Disclaimer This Report should not be referred to as representing the views of the European Investment Bank (EIB), of the European Commission (EC) or of other European Union (EU) institutions and bodies. Any views expressed herein, including interpretation(s) of regulations, reflect the current views of the author(s), which do not necessarily correspond to the views of EIB, of the EC or of other EU institutions and bodies. Views expressed herein may differ from views set out in other documents, including similar research papers, published by the EIB, by the EC or by other EU institutions and bodies. Contents of this Report, including views expressed, are current at the date of publication set out above, and may change without notice. No representation or warranty, express or implied, is or will be made and no liability or responsibility is or will be accepted by EIB, by the EC or by other EU institutions and bodies in respect of the accuracy or completeness of the information contained herein and any such liability is expressly disclaimed. Nothing in this Report constitutes investment, legal, or tax advice, nor shall be relied upon as such advice. Specific professional advice should always be sought separately before taking any action based on this Report. Reproduction, publication and reprint are subject to prior written authorisation of the authors. Forewords Space has always been a source of inspiration to explorers and scientists. From physics to chemistry, from material sciences to engineering, the pursuit of space has produced revolutionary technologies and vastly broadened humankind’s scientific knowledge. It has also improved our everyday life in many ways — the European Space Agency estimates that for every Euro spent in the sector there has been six Euros benefit to society. Until recently, space used to be synonymous with government spending: the enormous costs and risks involved made the sector generally inaccessible to private players. Today, major technology advancements and a new entrepreneurial spirit are rapidly shaping a new space economy. The sector sees the emergence of new private actors who see unrivalled commercial opportunities in space exploration and exploitation thanks to frontier technologies and the data revolution. Europe has historically been at the forefront of space exploration, investing massively in space infrastructures such as in the Copernicus and Galileo programmes. It still boasts academic and scientific excellence but it is at risk of losing out on the next wave of space innovation unless it seizes the opportunity to stimulate more investment in the new space sector. It is against this backdrop that I welcome this timely market assessment by our EIB advisory services coming ahead of defining space policy decisions. It not only highlights the disruptive forces transforming the space sector, challenging the old and new players alike; it also gives a clear roadmap on how we can leverage our current public financial support schemes at national and EU levels to pull in the much needed private capital. I particularly welcome the idea of setting up a “Space Finance Forum” to bring together the expertise of financial, industrial and academic stakeholders to explore and pilot new patient financing mechanisms and catalyse private investment in the sector. Last but not least I would like to thank my colleagues at the European Commission for the excellent collaboration and senior sponsorship throughout the study. We at the EIB are committed to mobilise our technical expertise and financial firepower and work with you to keep Europe at the forefront of the New Space era! Werner Hoyer President of the European Investment Bank 04 Towards a European approach to “New Space” Europe — the Member States, the EU, the European Space Agency (ESA), the European Organisation for the Exploitation of Meteorological Satellites (EUMETSAT) — has achieved many successes in space with breakthrough technologies and exploration missions, such as EU space projects: Copernicus — Europe’s Earth observation system — or Galileo, the satellite navigation and geo-positioning system, ESA’s exploring missions such as Rosetta or BepiColombo, as well as unique Earth observation and meteorology capabilities, such as Meteosat, and world-leading commercial telecommunications and launch systems with the Ariane family and Vega. Europe represents today the second largest public space budget in the world with programmes and facilities spanning different European countries. Between 2014 and 2020, the EU alone will invest over EUR 12 billion in space activities. It owns world-class space systems with Copernicus EGNOS and Galileo. With 33 satellites currently in orbit and over 30 planned in the next 10–15 years, the EU is the largest institutional customer for launch services in Europe. Nowadays, space technologies, data and services have become indispensable in the daily lives of European citizens. The international space context is changing fast — global competition is increasing with new entrants bringing new ambitions in space and space activities are becoming increasingly commercial with greater private sector involvement. Major technological shifts, such as digitalisation, miniaturisation, artificial intelligence or reusable launcher, are disrupting traditional business models in the space sector, reducing the cost of accessing and using space. The European space sector needs to adapt to seize business opportunities stemming from those changes so that Europe can keep its leadership and strategic autonomy in space. In this context, the Space Strategy for Europe, proposed by the Commission and enriched with the political orientations of the Council and Parliament set a high ambition for Europe to remain a space power and embrace the challenges ahead. Realising these ambitions requires fostering investments and an entrepreneurial space ecosystem in Europe. Numerous Union programmes and initiatives accompany the early stages or scaling up of start-ups, notably through the Union’s Investment Plan and its European Fund for Strategic Investments (EFSI) or the Union Framework Programme for Research and Innovation. They have helped to stimulate a number of investments into the space sector. Likewise, the recently launched VentureEU is expected to facilitate this process further. Looking ahead, the Commission has made ambitious proposals for the next Multi-annual Financial Framework (MFF) of the Union for the period 2021–2027. These include a dedicated Space programme for a total of EUR 16 billion, space research addressed by Horizon Europe, the next Union Framework Programme for Research and Innovation, and space investments addressed by the Invest EU programme. Access to finance remains as one of the identified bottleneck to space entrepreneurship in Europe. For the first time, the EU Space Programme proposes specific provisions to support the emergence of a “European New Space”. And precisely smart financing for space is at the heart of this strategy and will rely on synergies among all the programmes as well as between European and national levels. The analysis and recommendations of this report will help to shape the concrete solutions in the implementation of those programmes to stimulate more investments in space in Europe. Therefore, I am pleased to introduce this report prepared for the European Commission by the European Investment Bank through the collaboration between Innovation Finance Advisory and European Investment Advisory Hub. I would also like to extend our special thanks to all stakeholders who have contributed to this work. Elżbieta Bieńkowska Commissioner for Internal Market, Industry, Entrepreneurship and SMEs 05 Executive Summary Europe boasts a strong space sector. This is largely the legacy of successful space programmes, particularly those on satellite navigation and Earth observation, mostly built on public support. However, the space sector is undergoing unprecedented transformation and development on a global scale. Major technology advancements, a new entrepreneurial spirit and a renewed policy focus have put the space sector under the spotlight on the global innovation stage. Such rapid and constant transformation calls for new approaches to funding and supporting space ventures. The global space economy grew by 6.7 % on average per year between 2005 and 2017, almost twice the 3.5 % average yearly growth of the global economy. One particular contribution to this growth has been the “NewSpace” phenomenon: a series of technological and business model innovations that have led to a significant reduction in costs and resulted in the provision of new products and services that have broadened the existing customer base. Glossary NewSpace: a global trend encompassing an emerging investment philosophy