The evolution of the space economy has been defined by three phases, each of them marked by a different involvement of public and private actors. The first phase (1950-1969) was mainly characterized by governmental space programs, which contributed to the development of space technologies becoming part of the global collective imagination. The second phase (1970-2000), instead, was marked by the gradual entry of private actors, being it favored by the changes in technology and political strategies. The rapid growth of the computer and digitization industry had an impact both on the production of satellite infrastructures and on downstream space applications, facilitating their commercialization. In January 1970 with the "Open Skies" policy, the United States allowed any qualified company to launch a communication satellite, encouraging the swift growth of private telecommunications and satellite broadcasting activities.
On a global scale, an increasing number of countries joined the space market. In particular, European countries realized that their national projects would have not been able to compete with the other major superpowers. Hence, in 1975, the European Space Agency (ESA) was established with the aim of promoting - for exclusively peaceful purposes - the cooperation between European States in space research and technology. Nevertheless, given its intergovernmental nature, ESA did not change the structure of the European space industry, which remained focused on the national scale and concentrated in three countries, namely Germany, France and Italy.
The third phase (from 2000 to date) saw a progressively higher participation of private companies in space activities. In 2019, the revenue of the space economy reached $424 billion. Commercial applications hold the highest share of the turnover (two-thirds), although military and institutional orders still represent a significant share of the total profit (one third). Two factors have favored these developments. The first factor concerns the progress in artificial intelligence that allowed increasingly advanced activities from satellite signals and data, contributing to new economic activities often detached from the initial investments in infrastructure. Moreover, thanks to the introduction of small satellites, it was possible to reduce the costs of production and satellite services, while at the same time expanding the demand for them. Today, the daily life of almost every individual and company depends on one or more satellites - from the use of credit cards, to a reliable power grid, a navigation and earth observation service, and minute-by-minute weather updates.
The second factor focuses on spacecraft and space-access costs. NASA has moved from a government-run International Space Station access system to one where the transportation of goods and people relies on private companies, obviously under contract and control of NASA, thus eliminating the monopoly of Lockheed Martin and Boeing. As a result, significant progress has been made in the design and development of cost-effective launch vehicles. Currently, SpaceX has developed a system to reuse the first stage of rockets, which serves to give the initial thrust necessary to overcome Earth's atmosphere. Normally, after doing its job, the first stage came off and fell into the ocean as waste. SpaceX has successfully developed the recovery and reuse of the first stages of rockets, reducing the cost per kilogram of payload by more than 50 percent.
These developments provide access to space for many small and medium-sized companies, as well as educational and research institutions. In the near future, the development of the satellite Internet will allow people and companies to connect wherever they are - an effective alternative when terrestrial networks are absent or of poor quality. In addition, satellite technology gives rise to a growing stream of uses, including transportation and logistics efficiency, natural resource management, precision agriculture, environment and climate change monitoring, and makes it a potential source of economic growth, social well-being, and sustainable development.
As for the exploration programs, the return to the Moon is now days on the agendas of the major space agencies, such as NASA and ESA. Over the next ten to fifteen years, the use of space resources will be crucial for the success of expeditions to the Moon and other planets. The Moon's resources provide propellant for the in-orbit refueling of spacecraft, reducing their costs[1], and oxygen and water for support systems of the future space station around the Moon (the Gateway project). A new form of public-private partnership is rising, a partnership in which governments will provide initial support in the exploration and the advancement of critical technologies (telecommunications and Moon-Earth navigation), and in the construction of space infrastructure. NASA plans a first exploration mission at the South Pole of the Moon in 2024. The private sector would then take the lead in creating new markets and expanding the presence of humanity in space.
SpaceX is developing a vehicle, Starship, for missions to the Moon and beyond. The Starship is a fully reusable launch vehicle. It consists of two stages, the booster and the spacecraft, which in November 2018 Elon Musk renamed Super Heavy and Starship respectively. The overall vehicle architecture includes both the launcher and the vehicle, as well as the infrastructure for the first and subsequent launches, and zero-gravity propellant transfer’s technology. The spacecraft alone is designed to be used, in a first phase, without a booster for both freight and passenger transport. In April 2020, NASA selected a modified version of the Starship as one of three landing systems for the Artemis Program.
Moon mining will present also an opportunity to make space based solar power (SBSP) economically feasible. SBSP has been studied for decades. However, the costs of launching such large infrastructure from Earth to geosynchronous orbit (GEO) make these projects economically not feasible. At the SEE Lab-SDA Bocconi, we have initiated a study where the basic idea is to build the SBSP satellite with material from the Moon and to transfer the components to GEO where they would be assembled. Its costs are comparable to a large-scale nuclear power plant. If preliminary results are confirmed by the completion of the study, space based solar power can transform the energy markets of Earth[2], and can give an important contribution to the climate change’s mitigation.
Based on such expectations, Europe will have to face several challenges. Reduced costs of access to space and competition from other nations might relegate Europe to a marginalized position in launching activities. In the carrier sector, Europe has in fact remained tied to the old model characterized by government tenders and monopolistic industry approaches. Moreover, the European space market is fragmented due to the presence of intergovernmental institutions and different and often uncoordinated national security policies. The absence of a common defence policy further penalizes the European space industry compared to those of other nations such as the United States and China.
The structure of the European space industry therefore depends on the evolution of the institutions. A "more perfect Union" would change the structure of the European space industry. A federal space agency could unify the recruitment of the crews, multiple launches, operations, training, engineering, equipment and facilities; it could create communication networks and it could build a European scientific community equipped with targeted and multidisciplinary research centres. Furthermore, a federal space agency would be better suited to stimulate competition as a pivotal step towards the independence of the European space sector. A common defence policy would eradicate market fragmentation, paving the way for industrial mergers and acquisitions and stimulating the emergence of internationally competitive European champions.
The lack of progress in these directions would push national industries to find niches in larger markets - such as the United States - to grow and compete internationally. The latter is a sub-optimal scenario, but, speaking in Darwinian terms, companies adapt to the external environment in which they operate to survive and prosper. Bilateral agreements with the United States, in particular the Artemis project, would in this case become the cornerstone of national space policies.
NOTES:
[1] See A. Sommariva et al.: “The Economics of Moon Mining”, Acta Astronautica, vol. 170, May 2020.
[2] SBSP produces electricity 24 hours a day and 360 days per year. Another advantage is the average high solar incidence. In space, average solar incidence is about 33 kWh per square meter, compared to an average of 7.5 kWh in June on earth solar panels.
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