Europe seeks leading role in burgeoning space economy

With the global space economy set to triple in size in the coming decade, Europe is at “a critical crossroads,” according to Andrius Kubilius, the European commissioner responsible defence and space. 

“We are at the dawn of a space revolution, and I want us to be leaders,” he told the European Space Conference in Brussels on January 28.

“It will bring super-fast satellite internet, super-precise navigational observation, and in the future, a booming low Earth orbit economy, tourism in space, artificial intelligence, energy, in-space manufacturing, mining [and] colonies,” he said.

In a world increasingly characterised by geopolitical competition, the Commission sees space as central not just to its economic competitiveness, but also to its defence and security. “We cannot leave space to the axis of aggressive authoritarians,” Kubilius said.

Europe is much more bullish about its prospects in space than it was this time last year. In July 2024, the inaugural flight of the Ariane 6 rocket restored the continent’s autonomous access to space, after long delays left the EU reliant on Elon Musk’s SpaceX to launch its navigation satellites.

There is also a growing consensus around the need for Europe to become more competitive when it comes to strategic technologies, including in the space sector.

In the first half of this year, the Commission is finally due to present its proposal for a Space Act, to strengthen the single market for space with common rules on safety, security and sustainability.

The EU will also launch a new space industrial strategy, “to support our industry in research and innovation, to bring back supply chains and strengthen export markets, support space commercialisation and uptake of our space data and services,” Kubilius said.

Public contracts will be key to supporting the growth of European companies, and in the next two years the EU plans to create a platform for the aggregation of demand for launch services. “We need to say: buy European. And we need to say: buy bulk,” Kubilius said.

More investment

Competing with global powers such as the US and China will require a significant increase in both public and private investment, including in the next long-term EU budget. “I want to make sure our next Multiannual Financial Framework will fit our space ambitions both for civil and defence purposes,” Kubilius said.

Crucially, this year will also see ministers from European Space Agency (ESA) member states decide on the agency’s next three-year budget.

“Without significant funding increases at the ESA ministerial in November, we risk losing expertise, companies, talent, autonomy and innovation energy,” said ESA director general Josef Aschbacher at the conference.

According to ESA, European public investment in space currently stands at around €12 billion per year, or 11% of the global total, compared to 64% in the US. Europe’s share of global private investment is 16%, versus 60% in the US.

More than 60 banks and venture capital firms have now signed up to the ESA Investor Network, which aims to provide funding for space companies in the growth stage. Last year network members invested around €1 billion, around three quarters of total private investment, but this needs to be multiplied “by a factor of ten,” according to the ESA chief.

The EU also supports space start-ups and SMEs with the CASSINI programme, which includes a €1 billion seeds and growth fund. But “more is needed” in the next Multiannual Financial Framework, Aschbacher said.

He also insisted that ESA has the necessary expertise to work with the EU on defence-related projects, if mandated by the Commission and by ESA member states.

Some countries have already decided to put funds from their defence ministries towards ESA, which counts towards the NATO target of investing 2% of GDP in defence. This option could be used “to a much larger extent” at this year’s ministerial, he suggested.

Research and innovation

If defence is to be the main driver of European competitiveness, there needs to be “a better articulation between defence and space with an increased investment in research and innovation,” according to Manuel Heitor, chair of the Commission’s expert group on the interim evaluation of Horizon Europe.

“An effective defence research and innovation ecosystem requires a strong Framework Programme for research and innovation in the next Multiannual Financial Framework,” the former Portuguese science minister told the conference.

When preparing its report, Heitor’s group found that only 1.2% of the overall budget in the first three years of Horizon Europe was spent on space research, he said.

Heitor called for the EU to take more risks and embrace failure as a step to success. “Most of the start-ups created in Europe over the last 40 years have derived in a very short period of time from fundamental science,” he said. 

He also urged the Commission to launch, from this year, a Choose Europe programme to attract talent and improve research careers. This could be done “by using the existing co-fund mechanism of the Marie Curie fellowships and expanding it with industry, particularly with the space industry and organisations like the European Space Agency,” Heitor said.