Europe is currently trailing in the global space economy. While member states are advocating for increased public and private investment to maintain competitiveness, the challenges for the next European Commission mandate are significant. The sector urgently needs a fresh strategy to attract investors and drive innovation.
Over the past decade, the space industry has undergone a profound transformation. The European model, primarily reliant on public support, has become obsolete in an emerging economy where the US, China, and India are thriving. This reliance on outdated methods has hindered Europe’s growth and fragmented its potential in the global market.
Enrico Letta, the former Italian president, highlighted in the EU’s latest report that “this model is no longer adequate for today’s global, competitive space economy.” The concentration of industrial resources in a few countries and companies capable of building, launching, and operating large space systems has stymied Europe’s growth and integration in the global market.
Reinhilde Veugelers, a senior fellow at the Brussels-based economic think tank Bruegel, argues that Europe must focus on creating a well-functioning innovation system. “We are far behind the others and should not spend so much time trying to mimic what is already on the market in terms of technologies,” she stated. Europe’s success in space depends not just on dedicated space technologies but on innovations across various sectors.
To compete and achieve strategic autonomy, Europe needs to stimulate private capital, introduce common rules, and balance fund distribution across different space activities and countries, Letta asserts. This balanced approach is critical for fostering growth and preventing the fragmentation of resources.
A Unified Approach
Historically, the European Space Agency (ESA), comprising most EU countries plus Canada, Norway, Switzerland, and the United Kingdom, has operated on a principle where member investments are reciprocated through national industry contracts. While this has worked for space exploration, it may not be the best strategy for commercial space.
“We need the best long-term outcomes here, and whoever can deliver them should get them,” argues Veugelers. Forming consortia of European companies of various sizes and expertise could be a more effective strategy. This cooperative model could drive Europe’s space economy forward, preventing a scenario where each country subsidises its own players independently.
Xavier Llairó, co-founder of Pangea Aerospace, suggests that cooperative models and the risk-sharing sector could allow Europe to maintain independent access to space and remain competitive globally. While this approach might not be immediately profitable, it could foster long-term growth and sustainability.
Speed and Efficiency
ESA’s director general, Josef Aschbacher, emphasises the need for agile procurement procedures. “This is something that worries me, [the fact] that Europe is not at the same speed and volume in attracting funding,” he told Euronews. ESA’s agenda for 2025 prioritises commercialisation and capital attraction, aiming to address these concerns.
Aschbacher identifies three crucial ingredients for success: a good idea, access to money, and speed. Despite having the necessary skills and talent, the European space sector has traditionally been risk-averse and struggled to attract financial instruments. Helmut von Glasenapp, Secretary General of the Association of European Association of Long-Term Investors (ELTI), echoes this sentiment, highlighting the need for clear government directives and the involvement of public investors.
Leveraging Strengths
Currently, Europe’s access to space is facilitated by Elon Musk’s SpaceX, which dominates the global market for launch services. SpaceX is valued at around $200bn (€183.94bn) and can raise substantial funds from private investors, underscoring the scale Europe needs to achieve.
However, Europe could focus on developing efficient engines at an affordable and competitive price. Public investment could support the development of launcher engines, with private investment scaling up the remaining components. This collaborative approach could revitalise Europe’s position in the global space race.
Moreover, space manufacturing presents opportunities where small and medium-sized enterprises (SMEs) can play a vital role in European and international supply chains. With the right tools and a clear vision, Europe can regain its competitive edge in the global space industry.
Turkey, though not a full EU member, has been making significant strides in space and aerospace sectors. As Turkey continues to advance, its potential inclusion in the EU could position it as a key player in Europe’s space ambitions. Turkey’s capabilities in space missions could complement Europe’s efforts, fostering greater collaboration and enhancing the continent’s overall space strategy.
In conclusion, Europe’s path to funding its space ambitions lies in fostering innovation, stimulating private investment, and embracing cooperative models. By leveraging its strengths and addressing current challenges, Europe can reclaim its competitive position in the global space economy.
