In a progressively fragile and complex reality, the true social, economic and industrial revolution will start from space. Evolving from a “Space 1.0” with astronomy, to a “Space 2.0” with the 1960s’ Moon Race, through a “Space 3.0” with the 1990s’ International Space Station, “Space 4.0” is currently showing its immense potential through the New Space Economy. From international security to geo-localization, from telecommunications to smart cities, every aspect of current society is increasingly dependent on space platforms and tools. Satellite services and the data generated by them represent new, important assets that, if combined with the potential of the digital economy, are able to anticipate the needs of our society. Such assets are now constituting a market of more than € 370 billion, with an 8% growth rate which projects a further expansion of the market to €500 billion globally by 2030.
Hence, the space economy in few years became a real magnet for investments, not only from the institutional and public sectors, but more and more from the private . These investments aim at fostering innovations and research for the creation of new technologies which, starting from the space sector, are meant to have a spill-over effect on other fundamental “terrestrial” commercial, industrial and social sectors. As a matter of fact, recent trends in the space economy have shown a progressive pattern of cross-fertilization between space and terrestrial technologies and tools, further promoting public-private partnerships and balance between space-related and space-enabled services. Such dynamics enhanced the synergies between Spin-Out (Space to Earth) and Spin-In (Earth to Space) processes and relations, clearly showing the value added of space within and beyond economic development.
Europe’s space strategy
Europe is one of the leading international powers in space exploration, due to the space industry’s contribution to Europe’s technological and industrial competitiveness.
In 2019 the European space budget was equal to €9.3 billion, €7.8 billion from national budgets and €1.5 from the EU budget. The figures are still modest when compared to other great powers in the world: European institutional demand is 6 times smaller than the US or Russian equivalent, and
about 4.5 times less than China’s . However, the European space economy, including manufacturing and services, employs over 230,000 professionals and its value represents around 21% of the value of the global space sector. 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 €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.
According to Eurospace, the space industry posted final sales worth €8.7 billion (+2,6%) in 2019. In 2019 the revenues from institutional European programmes continued the growth trend observed since 2010. This growth was supported by satellite applications and launcher segments. European institutional programmes provided 63% of European industry revenues. In 2019 commercial and export segments revenues almost regained the level of 2017, after the serious drop in 2018. As usual this market segment is mostly supported by telecommunications systems, and, to a lesser extent by observation systems. Commercial and export sales represented 37% of industry revenues. However, the picture is not fully positive. EU space industry production and employment are unevenly distributed in Europe: 6 countries provide 90% of European capabilities and 8 medium to large industrial groups provide 65% of European capabilities.
The space industry is at the higher end of an important value-added stream of commercial and public/strategic services. Space value-added services and their ground segment users (e.g. Copernicus, Galileo, Broadcast and broadband services, geo-information) generate socio- economic benefits and support Europe’s development .
Space technologies, data and services can support several EU policies and key political priorities, including the competitiveness of the EU economy, migration, climate change, telecommunications, the Digital Single Market and sustainable management of natural resources. Space is also of strategic importance for Europe. It has key role in reinforcing the EU’s role as a stronger global player and it is an asset for its security and defence.
In 2016 the European Commission released a Space Strategy for Europe, underpinned by four main pillars. To foster the cross-fertilization between space and terrestrial technologies and tools, the Strategy aims to encourage the uptake of space services and data. Space technologies are considered by EU institutions to be ever more crucial to supporting the new breakthrough of the digital economy, supporting the functioning of smart cities, autonomous and connected cars, smart electric grids, surveillance and artificial intelligence. The potential of the EU space programmes Copernicus, EGNOS and Galileo is not fully exploited on a broad scale. Space technology has been recognized as crucial in specific priority areas: 1) climate change and sustainable development, to monitor CO2 and other greenhouse gas emissions and land use; 2) security and defence to improve the EU’s capacity to respond to the increasing challenges related to border controls and maritime surveillance.
As a second priority, the Strategy aims at fostering a globally competitive and innovative European space sector. Indeed, the security of industry’s ability to export its products are impacted by high dependence on non-European critical components and technologies. The Commission has thus given priority to addressing the major vulnerabilities of European supply chains by supporting the development of critical space components, systems and technologies, and long-term R&D needs, including disruptive technologies. While European firms remain competitive with regard to many innovations that have impacted the space industry, such as micro- and nano-electronics, digital transformation and convergence, and optical and ubiquitous communications, this leadership has rarely translated into a commercial advantage within the space sector. One of the reasons for this dissonance between European innovation and competitive advantages is the lack of upstream activities in Europe, as US firms dominate the upstream sector. The recently approved EU Industrial Strategy, approved in March 2020, recognizes that space technologies, data and services can strengthen Europe’s industrial base by supporting the development of innovative products and services, including the emergence of cutting-edge innovative technologies, fostering entrepreneurship and new business opportunities and horizontal synergies – i.e. so-called cross-fertilization. Furthermore, the new industrial strategy calls to rapidly build secure supply chains for critical raw materials. The survival of a competitive commercial industry in the space sector in Europe and the capability of Europe’s institutional customers to implement their mission requires a decrease in European technical dependence on non-European countries. It is crucial to identify which technologies are critical to ensure that for these Europe develops and maintains its own technology solutions and production capacities that is then used by institutional actors and European industry.
To realize a successful space strategy, it is essential to reinforce Europe’s autonomy in accessing space in a secure and safe environment, considering also that space is becoming more and more a contested and challenged environment, with the entry of new space actors such as China or India and private companies too. Even more crucial therefore is a fruitful cooperation between ESA, member states and industry to ensure that Europe maintains autonomous, reliable and cost-effective access to space and space technology, in particular concerning launching infrastructure facilities. Currently, the European industry produces two launcher lines: Vega and Ariane. The launcher systems market is almost exclusively European. This market is shared between institutional customers (mainly ESA) who fund development and system consolidation activities, and commercial customers (mainly Arianespace) who procure operational launcher systems by batches. Space services can also strengthen the EU’s capacity to tackle growing security challenges. Most space technologies, infrastructure and services can serve both civilian and defence objectives, creating synergies between civilian and defence systems that can reduce costs.
To achieve these goals, it is essential that Europe secures a much stronger role on the world stage. Through its trade policy instruments and economic diplomacy, the EU can seek to establish a level playing field for European industry also in the space sector, promoting the convergence of dual-use export controls and promoting European space technology abroad.
To achieve the EU’s space goals a key role is played by the European Space Agency (ESA). The ESA is not formally an EU institution, since it was conceived as an inter-governmental research and development agency. However, article 189(1) of the TFEU states that the EU “may promote joint initiatives, support research and technological development and coordinate the efforts needed for the exploration and exploitation of space”; furthermore, article 189 (3) of the TFEU establishes that the “Union shall establish any appropriate relations with the European Space Agency”. It is clear that an EU industrial space policy can only be effective if based on efficient cooperation between the EU, ESA and member states. The ESA’s strategy includes three destinations where humans will work with robots to gather new knowledge: low-Earth orbit on the International Space Station, the Moon and Mars. The three destinations share a common horizon goal, namely human presence on Mars.
The European Investment Bank has recently issued a report on the future of the European space sector, assessing the major shortcomings in the current landscape. It depicts a multi-faceted scenario. First, companies in both the upstream and downstream sectors of the industry struggle with access to finance, and business loans from commercial banks are nearly inaccessible. Furthermore, the space ecosystem lacks investors with a space background and space investment expertise. This is partially because space innovations have a longer development cycle than general tech.
Accordingly, the role of the public sector is still crucial. European public innovation instruments play an important role in unlocking private capital for the space sector: 40% of the companies seek public funding as a precondition for private investments. Furthermore, the landscape of space-sector support mechanisms is rather fragmented, and procurement is geared towards the traditional value chain: indeed, entrepreneurs find it hard to navigate through the different possible funding options and the traditional upstream space policy is accustomed to a large institutional market of traditional public procurement and R&D grant programmes. Public authorities around the globe are stimulating the setting-up of venture capital funds dedicated to the space industries: France and Luxembourg are examples of governments initiating venture capital funds to bridge the funding gap for space companies.
The strength of the Italian space industry
Italy has always represented worldwide excellence within the space sector: the Italian space industry is in fact ranked 3rd in Europe and 7th globally. The leading role of Italy in the space sector dates from the 1960s’, when it became the third country in history, after the USA and Russia, to launch a satellite into space, the San Marco satellite from the Malindi base. Also, it is thanks to Italy if Europe managed to see the first moon landing in 1969, due to the Italian Telespazio antennas in the Fucino plain in Abruzzo. Fifty years later, with a total turnover of almost €2 billion and more than 200 companies in the sector, the space economy represents a clear priority for Italy. Among these companies, Thales Alenia Space Italy, together with Altec, and the Italian Space Agency (ASI), play a leading role in the “upstream” space sector, which deals with the construction of satellites, technologies and robots for earth observation, security, and exploration of the solar system, as well as with launches into orbit, led by the Italian Avio with its launcher Vega. The “downstream” sector – which deals with the management of satellites and ground services, and the collection and distribution of data - instead sees as leaders Telespazio and Leonardo, representing national champions recognized globally.
In collaboration with the Italian Government, the Italian Space Agency delineated in the “Document on the Strategic Vision for Space, 2020-2029”, a clear trajectory for the future of an Italian space economy, built on three main pillars. The first pillar is centered around investments and the economic expansion of the space sector through new capital streams and ventures. Within this framework, Italy managed to conquer a leading position during the 323° ESA Industrial Policy Committee (IPC) meeting, where the country obtained contracts worth a total of €1.6 billion. This funding is expected to generate net revenues of around €800 million, further consolidating the role of Italy within the European space sector. Such returns will be mainly driven by three major projects assigned to Italy for earth observation and space exploration:
- ROSE-L and CIMR: among the six “High Priority Candidate Missions” discussed in the meeting in the framework of the European earth observation programme “Copernicus”, Italy has been entrusted with the two, most expensive missions: ROSE-L and CIMR. Both led by Thales Alenia Space Italy, with the participation of OHB Italy and Leonardo, such earth observation missions are delineated in contracts for a total worth of €1.03 billion, generating a net turnover of €485 million for national industries.
- IHAB: the second major project under Italian leadership will be realization of I-HAB, the International Habitation Module for the Lunar Gateway, the moon-orbiting station which will be operative from 2024. As a cooperation between NASA and ESA within the ARTEMIS program, the contract has a net value of 327 million euros, with an expected turnover for Italy of €137 millions.
- European Return Orbiter: Italy will also be in charge of the realization of essential elements for the European Return Orbiter mission, such as the Martian Orbit Insertion Module, the telecommunication systems, the integration activities of the entire space probe (which will then be assembled and prepared for launch in the Thales Alenia Space plants in Turin). The total value of such venture is estimated at around €129 million.
Adding to the abovementioned projects, the ESA Committee also assigned to Italy, among other minor contracts, important roles in the Hera Mission for the study of an asteroid. For this venture, the Italian space industry was awarded contracts for the realization of important on-board systems such as, among others, the electric power system (assigned to OHB-Italy), and propulsion (assigned to AVIO), for a total value of about €24.5 million. These impressive results and successes for the Italian space industry come after years of intensive research on advanced technologies and innovation. Research and innovation appear in fact to be the second pillar of the Italian space economy. Setting up effective research systems would not only create benefits worldwide through processes of knowledge-sharing, but would also increase the competitive advantage of Italian firms in the industry. In this regard, it is important to mention how 80% of the Italian space industry’s value chain consists of small and medium enterprises (SMEs), which will be among the major end-beneficiaries of these successes. The Italian Space Agency holds, in fact,as priorities the constant transfer of technical-scientific knowledge to and for the benefit of SMEs, as well as large companies, universities and research centers, while at the same time creating initiatives and competitions to support start-ups for research into new ideas.
Investments in innovation and research not only aim at expanding the Italian space industry, but are also meant to consolidate the position of Italy in the international space arena. Strengthening the image and role of Italy on the international level emerges as the third main pillar of the 2020-2029 Strategic Vision. The leverages to achieve such goals are mainly two: first, an enhanced space diplomacy, built on international cooperation with other partners in Europe and the world, in terms of space policies but also space systems production. An example of this cooperation is Thales Alenia Space, a company joint venture owned 67% by the French Thales and 33% by the Italian Leonardo-Finmeccanica, with total turnover of €700 million and 2,300 employees in four different Italian cities . The collaboration with the French space industry has been further consolidated with Telespazio, owned 67% by Italy’s Leonardo-Finmeccanica and 33% by France’s Thales. Another, very recent example of space diplomacy is the Italy-United States agreement within NASA’s Artemis project, which will lead Italy to be the first European country to land on the Moon. This endeavor will also establish another primacy, bringing the first woman to land on the lunar surface. The second leverage is the construction of a dual economy, considering both the economic/civil aspect as well as the security/military one. One of the most important projects aimed at this purpose is the Cosmo-SkyMed, the first terrestrial satellite observation system ever created by Italy for the prevention of environmental disasters, for the study of the earth's surface and for security.
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