You are here

Europe, we have a problem

Jun 30,2022 - Last updated at Jun 30,2022

By Rodrigo da Costa and Kris Peeters

BRUSSELS  —  The digital revolution’s potential to create new growth opportunities, transform our economies, and support the green transition relies heavily on technologies that are literally out of this world. Powering today’s automated services and artificial-intelligence applications requires precise, timely data furnished by space-based technologies (global navigation, earth observation, environmental monitoring, and communication satellites).

This is true in agriculture, transportation, energy, defence and even finance. Farmers rely on satellites to make decisions about which crops to plant and when, while ships, planes, trains, and automobiles use satellite data to navigate safely and efficiently. Power companies need satellites to monitor performance and maintain their grids, and financial services use the unique data they collect to inform investment decisions and for accurate time stamping.

The European Union has invested heavily in this area through multibillion-euro projects such as Galileo and EGNOS (European Geostationary Navigation Overlay Service); Copernicus, the Earth-observation system; and GOVSATCOM, the secure satellite-communication program. Europe also boasts many companies that are at the forefront of space innovation. But European investment in space-based technologies  —  particularly fast-growing strategic sectors such as consumer solutions and drones  —  is being outpaced by others, including the United States and Asia.

Europe’s place in tomorrow’s world will be determined largely by its competitiveness, influence, and ability to act autonomously. That means we will need to invest more in space-based technologies, many of which have defense as well as civilian applications.

According to the EU Agency for the Space Programme and the European Investment Bank’s (EIB) joint Global Navigation Satellite Systems Investment Report, research spending on satellite navigation-related technologies and services in Europe rose at a compound annual rate of 5.7 per cent between 2016 and 2019. Yet North American and Asian companies increased their annual research spending in the field by 8.6 per cent and 8.7 per cent, respectively. To stay competitive and maintain its space-technology autonomy, Europe will need to invest as much as 42 billion euros ($44 billion) in research and development over the next ten years.

As much as 85 per cent of European R&D spending on satellite-navigation services comes from just five large companies. While these industry leaders have both resources to reinvest and easy access to capital markets, smaller European companies find it much more difficult to secure funding, especially compared to their US or Asian competitors.

One factor holding Europe back is a lack of venture-capital investors who specialise in the space sector. This scarcity forces many of Europe’s rising stars to turn to foreign capital. Over the last five years, North American and Asian competitors have acquired stakes of at least 5 per cent in as many as 14 European companies in the satellite-navigation sector. Such acquisitions not only lower Europe’s share of global revenues; they also undercut its competitiveness by reducing potential technological capabilities along the innovation value chain.

The public sector plays a huge role in the space industry, both in Europe and among our competitors. As the EU bank, the EIB supports the European space industry through its regular lending activities, venture debt operations, the European Investment Fund (EIF), and various targeted programmes. These include the 1 billion euros CASSINI Space Entrepreneurship Initiative, launched in January 2022, and the new 6 billion euros Strategic European Security Initiative, which the EIB unveiled in March 2022. We have also invested in innovative, high-potential European satellite makers such as Spire (Luxembourg), D-Orbit (Italy), and EnduroSat (Bulgaria).

But it is not enough to match America, China and Japan, which, in addition to providing direct funding to help space start-ups grow and mature, also support their space industries by awarding government contracts to rising-star companies. This approach affords American, Chinese, and Japanese companies a public stamp of approval and steady revenues, which in turn help them emerge as powerful global players.

The stakes of the new space race are as high as they were during the Cold War. But this time, Europe is a contender. To stay in the match, however, we will need to do much more to make our brightest stars shine. That starts by channeling more tailored funding to small and medium-size enterprises in this critical sector to help scale up and commercialise their new technologies.

On June 29-30, diverse market participants will come together in Paris to discuss these issues at a workshop organised by the EIF, Backing the Stars of Europe: New Horizons for Private Investment Funds in the Space Sector. As recent global developments have shown, Europe cannot afford to postpone efforts to secure its own competitiveness and autonomy, both on Earth and in space.

 

Rodrigo da Costa is executive director of the EU Agency for the Space Programme. Kris Peeters is vice president of the European Investment Bank. Copyright: Project Syndicate, 2022. www.project-syndicate.org

up
59 users have voted, including you.


Newsletter

Get top stories and blog posts emailed to you each day.

PDF