Brussels, 28 February 2013
Europe's space industry – competing globally in a complex sector
Space is at the service of the European citizens. Many of the systems and services that are today essential for our well-being and security depend directly or indirectly on space. Without being aware, European citizens rely on space technologies when they use their mobile phones, make financial transactions, take an airplane, watch the weather forecast or look for the nearest restaurant using their cars' navigation system. Space has become part of our daily lives. The Commission therefore proposes a new space policy to meet the challenges of today's world.
Europe's space industry is a driver for growth and innovation and a highly strategic sector, helping us face both societal challenges and create innovative technologies and services. Existing space programmes Galileo and EGNOS are expected to generate economic and social benefits worth around €60-90 billion over the next 20 years.
EU space industry under pressure
Space has become a global business. The European space sector is increasingly under pressure from industries in new emerging space powers such as India and China. Also, the European space industry differs from its main international competitors to the following extent: its budget is smaller, it relies more on commercial sales, the part of military expenses is smaller, and synergies between civil and defence sectors are far less developed. Furthermore, unlike the US, Europe's downstream satellite navigation and Earth observation markets are only now emerging.
The European industry faces commercial and innovation challenges:
Across the world, the space industry is highly subsidized through institutional programmes which translate into financing of research and development (R&D) programmes and purchasing of space products and services. Total European R&D is roughly estimated to account for 10% of unconsolidated sales turnover of the EU space sector. In an international context, the funding of European R&D is relatively small. For example, approximately 25% of the US civil space budget is spent on R&D. Furthermore, expressed per capita, NASA's civil budget alone is approximately four times bigger than the combined European civil space budgets (national, ESA and EU/FP7). The European institutional market is relatively small – in 2009 the US budget was almost 10 times higher than the European budget – and very fragmented, due to the diversity of public stakeholders and their different and not always coordinated industrial policies.
The satellite communications (SatCom) industry is instrumental in sustaining the entire European space industry. This segment's sales account for more than 60% of the European space manufacturing industry over the last ten years. Although Europe can count on a world-class SatCom industry, this sector faces not only increasing global competition but also technical and political challenges due to the scarcity of the radio spectrum.
Europe needs to position itself in the emerging markets for navigation (SatNav) and Earth observation applications (SatEO), services and products. These service industries have a high potential for growth and job creation. As for European SatNav, it is estimated that related EU programmes Galileo and EGNOS will generate socio-economic benefits for around €60-90 billion over the next 20 years. As regards SatEO, the benefits from the EU's Copernicus programme are estimated at almost €35 billion by 2030 (comparable to 0.2% of the EU's GDP). However, the development of the European satellite-based services industry is currently challenged by the existing regulatory framework and insufficient support to start-up companies which are at the heart of services and applications development.
To address these challenges, Europe should achieve technological non-dependence, security of supply and maintain independent access to space.
Why is EU intervention necessary in this field?
The EU needs to ensure cost-efficiency and competitiveness at global level, while boosting the development of state of the art skills and competencies. We also need to address space industry issues in a global and consistent manner.
The EU aims to intervene for two reasons:
More than half of the turnover of the European space industry depends on the commercial market. However, the space market does not follow the classical rules of competition as the sector is highly subsidized worldwide. The EU should therefore strive to ensure that its industry is on an equal footing with its global competitors and that it has the skills and technologies required to maintain the level of excellence achieved today. To remain competitive, the European space sector needs a European industrial policy that takes into account all the challenges the industry faces.
The EU will be one of the largest institutional clients for the European space industry over the next 10 years. Our policy choices could either strengthen or weaken our industry. Implementing an industrial policy for the space sector allows the definition of a clear line of action in the service of our growth, our jobs and our people.
The Commission's new space policy Communication identifies the main challenges the European space industry faces and proposes a series of measures to help it becoming more competitive at global level. Below is an overview of the proposed measures.
Improve the legislative framework for service and manufacturing
The majority of Member States have not yet developed space legislation.
The expansion of space activities, notably the development of the commercial market, could raise legal issues which are not fully addressed at European level such as: obligation for insurance, registration and authorisation of space activities and services, sanctions, and environmental issues.
The Commission could be called upon to establish an EU space regulatory framework in order to fully exploit the internal market potential for space, by filling existing legal gaps and preventing the development of divergent national legislations.
Monitor the impact on the space industry of the control regime for dual-use goods and regarding EU intra-EU transfer of defence products.
Investigate how to best take into account SatCom'se future spectrum needs in the context of the Radio Spectrum Policy Programme;
Contribute to the preparation of the next ITU World Radio Communications Conference in order to defend EU interests in the field of global and regional spectrum allocations.
Explore whether commercial spaceflights activities need to be embedded in a legal framework
Launch a study to assess the market potential of suborbital spaceflights to determine whether to develop a European regulatory approach.
The Commission will pursue the development of European space standards on the basis of the work already performed by the European Cooperation for Space Standards Organisation and according to the mandate issued to the European Standardisation Organisations (CEN-CENELEC and ETSI).
Ensure the availability of necessary skills
To remain competitive, EU needs to keep and expand its own resources, develop new skills to meet the need of emerging sectors and attract talent from non-EU countries:
Develop and provide to industry a long term and clear vision of the institutional market at EU level;
Carry out and update mapping of the supply chain to ensure the right level of European independence, expertise and competitiveness;
Support the development of appropriate skills required specifically by the space sector, and promote the establishment of mutually recognised academic space qualifications in Europe (initiate and coordinate between Member States the development of space academies);
Include in future R&D framework programmes dedicated actions in which part of the research must be carried out by PhD candidates – as is currently the case in air traffic management;
Encourage the development of lifelong learning programmes through strengthened cooperation between industry and universities, in particular in the emerging area of satellite based applications;
Enhance the EU's appeal to foreign researchers.
Support the European space industry's access to the global market
It is vital for the European space industry to maintain and strengthen its position on the commercial market. However, major non-EU countries' institutional markets are not accessible to European industry. As international cooperation could also serve as a market opener, the EU must ensure that space is integrated into the Union's external policy:
Analyse measures and good practices developed by Member States to support access to international markets;
Ensure that the specificities of the space sector and the European space industry are taken into account in trade negotiations and relevant commercial agreements, to foster a level playing field.
Supporting research and innovation
Enable European competitiveness in space, notably by ensuring non-dependence in critical technologies and by fostering innovation.
Continue to coordinate the Commission's efforts with those of Member States, the ESA and the EDA in order to identify critical space components and to ensure their availability;
Examine whether it is feasible to boost the emerging Earth observation market through incentives such as long term contracts with the Earth observation industry;
Promote the use of space-based applications in EU policies;
Support awareness raising campaigns to make possible users - cities, regions, various industrial sectors, etc - aware of the potential of space-based applications, generate interest in such applications and facilitate this with ad hoc take up actions (e.g. vouchers for local authorities or SME end users);
Support the development of innovation support measures to industry at EU, national and regional level with a specific focus on SMEs in the downstream satellite-enabled services sector;
Implement the Commission Global Navigation Satellite Systems (GNSS) Action Plan to foster the development and adoption of satellite navigation applications using EGNOS and Galileo;
Support space technology cross-fertilisation with other sectors and spin-in/spin-offs in R&D and Innovation programmes.
Enable advances in space technologies
The EU intends to boost technological progress in strategic areas and to contribute to the necessary effort in space research, in particular in breakthrough technologies. Key Enabling Technologies (KET) have been recognized as central to all technological industrial competitiveness in Horizon 2020, but also in particular to innovative space technologies. The space industrial policy should therefore support KET uptake in new space technologies, by.
Increasing space research efforts, in particular in breakthrough technologies
Supporting the development of alternative technologies to those of competitors
Promoting R&D support to industry and space research organisations, including the downstream service sector and support the development of application-oriented R&D programmes at universities related to space technologies and promote the transition from prototyping to product and market
Assessing hosted payloads business case, to explore the potential for further institutional and scientific use and identify the best ways to address the challenges ahead such as legal issues, government/military requirements, etc.
Assessing other cost-effective launch opportunities in order to embark new technologies to test them
Useing Horizon 2020 to accelerate the implementation of substitutes to raw materials needing replacement such as those listed within the framework of the REACH regulation.
Stimulate the full exploitation of space data and the development of innovative applications
Ensure more extensive utilisation of space data from existing and future European missions in the scientific, public and commercial domain.
Expanding the array and use of available financial instruments
Given their associated risks, large scale space infrastructures need large financial contributions over long periods, continuity of funding both for operational and financial reasons and flexibility/contingency instruments. Existing financial products might not match these needs. The Commission therefore proposes to:
Explore possibilities to facilitate access to finance, especially by SMEs, by promoting the further development of innovative financial instruments and the use of the existing instruments;
Encourage Member States and regions to increase the use of structural funds and innovative financial instruments to promote the development of innovative satellite-based services by SMEs;
Ensure the rapid extension of the scope of the EU project bond initiative to space infrastructures.
Making a better use of procurement policy
The vast majority of public funding is channelled to space industry through public procurement. Like the defence and security sectors, space is strategic and there is a need to ensure that adequate EU instruments and funding schemes, which take its specificities into account, are put in place. The intention is to:
Develop and provide to industry a long term and clear planning of the institutional market
Analyse the impact of the implementation of the EU Directives on public procurement and defence procurement on the national and European space markets
Early coordination for programmes which involve joint funding by both the Commission and ESA. It should take place to ensure a smooth transition between the development phase and the operational phase.
Establish and implement a real European launcher policy
EU autonomy in strategic sectors such as launch services is of fundamental importance. A real European launcher policy must be established by the institutional actors - as is the case in the other space-faring nations - to avoid short term or case by case decision taking.
Support the setting up and operation of European Space Situational Tracking service
The Commission proposes to provide an organisational framework to support the setting up and operation of a space surveillance and tracking (SST) service at European level(see Memo 2). The SST would be built on existing national assets and expertise. It would define a data policy which takes into account national security interests and which allows the monitoring and hence the protection of space infrastructures, in order to ensure the sustainability of space activities in Europe.
The proposed measures do not entail any new expenditure, but suggest recourse to existing instruments or non-financial actions.
Within the EU, space industrial policy has been the subject of discussion over recent years. This discussion has intensified with the increasing involvement of the EU in space matters and the adoption of the Lisbon Treaty. The Commission 2010 Communication on an integrated industrial policy stated that the Commission will "pursue a space industrial policy developed in close collaboration with the European Space Agency and Member States". In its 2011 Communication setting out the space strategy for the Union the Commission underlined that "it is vital to quickly draw up, in close collaboration with ESA and Member States, a space industry policy that fully reflects the specific needs of each space industry sub-sector". Member States welcomed this intention in Council conclusions adopted in May 2011.