ESA funding must change for it to become sovereign: FT

17th Jan 2023
ESA funding must change for it to become sovereign: FT

The European Space Agency wants to become sovereign in its ambitions in space. However, it can’t expect to operate in the same way as the United States. In an article published by the Financial Times, a senior researcher at Harvard Business School, Sinead O’Sullivan, claims that ESA’s director general Josef Aschbacher’s goal to create a “NASA-style model” where the agency buys services from the private sector is “incompatible with current European funding structures”. In short, ESA funding needs an overhaul.

Member states instead of united states

Essentially, O’Sullivan argues that Europe’s private sector is unwilling to support Aschbacher’s vision of space sovereignty regarding launches and Earth Observation satellites. Currently, ESA is funded by its Member States ‘mandatory’ contributions which are calculated in accordance with each country’s gross national product. In turn, ESA invests in each Member State through contracts for space programs, from the management and development of products and services. However, NASA can purchase services from the private sector due to a strong and mature market, with private US investors spending $330 billion into the space sector – among other industries – in 2021 alone, according to a BryceTech report. O’Sullivan said:

“The problem constraining European venture capital spending is twofold. First, the venture funds are too small to offer meaningful backing for large infrastructure projects such as space launch companies. Second, European venture funds are often unable to take on such large, risky defence bets in their portfolios.”

O’Sullivan echoes what Aschbacher calls a “space launch crisis” and believes Europe cannot follow the US in its early-stage financing, but rather find a structure that will benefit the size of the European market.

ESA funding is growing

However, while there is a call to change the downstream of its funding, ESA is growing at a steady rate compared to only a few years ago. In November 2022, government ministers committed to increasing ESA’s budget by 17% compared to the previous meeting in 2019.

Aschbacher believes that this increase represents positive growth, and in response to O’Sullivan’s article, he tweeted:

“Valid assessment underlining just how much needs to be done. The ambition that @ESA has shown in the past 2 years and the trust that Member States have put in us as an Agency is a precursor to getting Europe out of this precarious situation. Make no mistake – we are tackling these issues with full energy. Change of attitude will not happen overnight, we need clear political commitments and trust and support from the public and industrial partners alike.”

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