Generating Growth from Space
Critical to an assessment of the potential for space activities is the appreciation that, although they most often conjure up images of rockets, satellites, the space station and Mars rovers, the expenditure on these “upstream” activities is modest by comparison with the revenues generated by the “downstream” services that make use of space technology, i.e. “space applications.” In fact, the upstream sector (including satellite launches) produces about 10 billion euros ($12.8 billion) in revenues versus 150 billion euros in the downstream sector (including user terminals, sale of satellite capacity and value-adding services and applications, with the last accounting for 100 billion euros). Fostering the development and diffusion of these applications, and maximizing the exploitation of European capability, is therefore an important challenge.
Greater use of space services and applications is key to strategic and economic development across Europe. The space industry is an important driver of economic growth and of high-tech skills and research.
Being instrumental in promoting and supporting the emergence of the European space industry, the European Space Agency (ESA) responded to this challenge with the Integrated Applications Promotion (IAP) program, established by the Ministerial Council in 2008. Its aim is to reinforce and extend the impact of the space sector through development and wider application of commercial products and services using space technology or space-derived data.
The close relationship with the space industry has been a key factor in the agency’s approach from the outset, and has served to build up the European capability to launch and operate space missions. This had to be complemented by a strong and structured relationship with users of space-based data and services and the extension of awareness of their importance and scope with the aim of maximizing the overall economic return on space investment. It should be recalled that ESA played a major role in the first steps of the Eutelsat and Inmarsat organizations, in particular by developing the first generation of geostationary spacecraft, the ESA Communications Satellite and Marecs. Many downstream activities resulted from this line of action, which prefigured the spirit of IAP. It has also provided support through public-private partnership agreements to satellite communications projects, which have subsequently enabled companies to obtain funding from nongovernmental equity and debt markets (a good example being the Avanti Hylas system). The success of these ventures has led to a substantial increase in services and revenue growth.
Better use of space assets
Growth of space-related activity and investment is especially expected to come through combining space capabilities such as satellite communications, navigation and Earth observation, as well as from utilizing space services and applications in concert with ground-based capabilities — so-called integrated applications. ESA is placed in a privileged observation point, from where novel opportunities for space-based applications and services, new user groups and specific research and industrial capabilities can be identified, assessed, supported and promoted.
There is strong evidence that investment in space systems stimulates economic growth. In particular, as Oxford Economics has argued, there are a number of catalytic or spillover impacts whereby the space industry helps to facilitate improved supply-side performance, creating capabilities and enhancing productivity across the wider economy. Euroconsult recently reviewed seven different studies of the economic multipliers achieved by investing in the space sector. Covering both the European Union (EU) as a whole and five individual European countries, these studies by the Organisation for Economic Co-operation and Development and others came up with multipliers of between 1.4 and 19, with four of the results being in the range from 3.7 to 4.8 (i.e. one euro invested in the space sector generated an overall increase in revenues or other benefits of 3.7 to 4.8 euros).
In fact, each year the average EU citizen contributes the equivalent of the price of a pizza towards the cost of the European space industry, while the revenues generated by space services are estimated at between 19 and 30 times larger. Few industries can claim such a return, or an average annual growth rate of at least 7 percent throughout the past five years of financial turmoil. The greatest prospects for future growth are to be found in the integration of the different technologies of satellite communications, satellite navigation and satellite Earth observation.
Expanding space activity
IAP aims to foster the development of new commercial activities, but it also is strongly relevant to other aspects such as social welfare and sustainability, and to serving the Millennium Development Goals. By the creation of downstream activities in both fields, it will also create, through research and advanced training, high-tech skills that will benefit the employment of a younger generation.
The overall objective of the IAP is to stimulate a significant expansion of the scope of space activity beyond its current confines, through identification of projects with new user communities, where it can integrate and deliver operational services in ways that are more innovative, effective, resilient and commercially viable than terrestrial alternatives.
IAP is active across a remarkably wide range of market sectors: in fact, only combat-related military activities are specifically excluded by the ESA Convention. Initial thematic focuses were on applications of space for health, safety/security, development, energy, transport, agriculture, civil protection/crisis management and fisheries; in addition, there have been regional activities focused on Africa, the Baltic, Alpine areas and the Arctic. The list is, however, constantly expanding, with recent activities highlighting the importance of the financial services sector (especially insurance), renewable energy, forestry, critical infrastructure (especially electricity networks), maritime safety and surveillance and civil security and protection.
Obviously, IAP has to be different from the more classical activities of ESA. The needs and the prospect of future operational services have to be expressed by the prospective users. To ensure that this “bottom up” nature is an actual feature, the program relies, for most projects, on part funding by ESA and its user partners. IAP operates through a set of successive stages: first a call for ideas and proposals, then feasibility studies, demonstration projects and preoperational activities, ending in a new operational, self-supporting service. De facto, it can be considered as an incubator where the user role is of paramount importance. The overall purpose is to close the gap between concept and commercialization and to see the validation and establishment of a new self-sustaining operational activity, which would operate without any further ESA involvement.
IAP relies on a central team and a network of so-called Ambassador Platforms scattered over the ESA member states. Their task is to communicate with the prospective users, to make them aware of the service they could obtain through the use of space tools and ultimately to get feasibility studies started to assess the viability of the application, both from a technical and an economic standpoint.
Delivering positive outcomes
After four years, IAP has now achieved a significant level of maturity. IAP’s central objective is to stimulate the emergence of new utilizations of space for the benefit of the society. The success of its first years can be assessed by the number and development stage of IAP activities. A stable “cruise level” was achieved less than three years after program start, with 43 feasibility studies and 19 demonstration projects, plus others in the pipeline. Moreover, three of the projects were delivering a preoperational service and two had already become operational. The total number of activities is continuing to increase, as are the number and proportion of feasibility studies successfully evolving into demonstration projects. In general, the time from initial submission of an idea to delivery of a service is in the range of three to five years.
The operational or preoperational IAP services are:
å Amazon, a preoperational telemedicine service for users in remote areas that builds upon an earlier aeronautical service, Tempus, developed by the U.K. company RDT, which is now in operation with airlines and corporate aviation operators. Amazon is being tested in the field by International SOS.
- FruitLook, a preoperational service for optimal use of irrigation and fertilizers in vineyards and orchards in South Africa, developed by a Dutch company.
- Talking Fields, a preoperational precision agriculture service implemented on farms in Germany and Ukraine.
- An operational service for the International Atomic Energy Authority monitoring a network of atomic energy sites including Chernobyl, operated by NDSatcom.
- FlySafe, an operational service for the Belgian and Dutch air forces to reduce the incidence of bird strikes on aircraft, operated by the Netherlands Meteorological Office.
As part of its efforts to stimulate further new services, the IAP program has been increasing its activities from the new ESA Harwell Centre in the U.K. to provide Pan-European support for small and medium enterprises in particular. This is reflected in the network of IAP Ambassador Platforms, which includes one hosted at Eurisy in Paris that has a specific focus on small and medium enterprises. In this context IAP is working with many different national initiatives, such as the International Space Innovation Centre and the nascent Satellite Applications Catapult Venture, which are co-located on the Harwell campus. These partners share common aims with IAP, namely to:
- Inspire entrepreneurs and industrial leaders to develop innovative products and services using satellite data.
- Cultivate new industry sectors.
- Equip companies with the knowledge to develop new technical capabilities that use satellite services to make significant savings in their organizations.
- Broker closer connections with upstream manufacturers of satellite hardware and end users to ensure that future missions deliver data with significant economic growth potential.
Through IAP, the European Space Agency is actually enlarging its domain of action, from development tasks to maximizing the exploitation of the tools and technology/service platforms it has created for the benefit of Europe. There are quantifiable benefits from space services improving the quality of life in many areas. This is a challenge in which the stakes are high — as are the rewards.
So it is crucial that this program is endorsed and strengthened at the next ESA Ministerial Council. The IAP program is increasingly associated with growth multipliers and return on investment — which together comprise the key economic objectives for member governments of ESA. As such, within the overall potential ESA budget increase of 1 percent, IAP expenditure justifies enhanced support.
André Lebeau is chairman and Ian Taylor and Jean-Pierre Contzen are members of the Integrated Applications Promotion Advisory Committee.