The future of the Space Economy: between regulation, economic opportunities and sustainability

INTRODUCTION

Gregorio De Felice

The Space Economy includes all the activities related to the exploration and utilisation of space. It is a sector that is experiencing truly exponential growth and is assuming an increasingly strategic role in today's complex geopolitical environment.

Today, the Space Economy is supported by a clearly expanding ecosystem involving private companies, start-ups and attracting more and more private capital.

Intesa Sanpaolo, for example, is among the first European banks to have invested in the Space Economy, and in the autumn of 2023 it became a shareholder of SpaceX, the world leader, we all know, in space exploration.

Globally, the Space Economy had already reached a value of around USD 600 billion in 2023, according to the Space Foundation data, with significant growth prospects for the coming years and the satellite segment playing a major role.

According to the Satellite Industry Association, in fact, 2023 was a historic year for the global satellite industry. More than 2,700 commercial satellites were launched into orbit, with an increase of more than 20% compared to 2022, an exceptional number of 190 launches.

Compared to just five years ago, we are talking about a growth of more than 360% in the number of active satellites in orbit, which now stands at almost 10,000, and there are further growth prospects, especially considering the expected development of mega-constellations.

Even in 2024, the focus on space remained high, as confirmed by the important achievements in terms of space exploration. In June 2024, for example, China succeeded in completing a mission (Chang'e 6) with the aim of bringing back lunar soil samples extracted from the hidden face of the Moon, where none had landed before. Once again, the Asian giant shows its great technological know-how. July 2024 saw the debut of Ariane 6, the European launcher that will allow Europe to become autonomous again in reaching the extra atmosphere.

In this new space race, however, a new regulatory framework needs to be defined. Italy is at the forefront in this direction; in June, the first framework law on space was approved, anticipating the European Union's intentions for a sector regulation, dedicated in particular to the issue of access. Italy has always played a leading role in the Space Economy. Today it ranks sixth, both in world trade and among the main patenting countries, confirming its high competitiveness, also thanks to the presence of a particularly diversified supply chain.

The skills and know-how of the Italian space system are recognised internationally, as confirmed by the many international initiatives in which Italian operators are present. There is no lack of development opportunities for this industry: think about the space transport, in-orbit services, Earth observation, up to the so-called lunar economy. In the coming years, many development opportunities will also be created for many operators who are today far removed from the world of the Space Economy.

And there are many challenges ahead. One of these is sustainability. Space requires a search for more efficient solutions in environmental terms, given the reduced availability of resources, but also requires the development of green solutions in propulsion systems for launches. And finally, there is the issue of the growing number of space debris, which is an important issue for the environmental sustainability of future space projects.

So many topics of interest, we talk about them with a great expert in the field, Professor Simonetta Di Pippo, who is Professor of the Space Economy Practice and Director of the Space Economy Evolution Lab (SEE Lab) at SDA Bocconi, as well as visiting professor of practice at the New York University in Abu Dhabi.

Professor Di Pippo, thank you for being with us. I believe you will help us greatly in shedding light on these and other issues, relevant to the future of the Space Economy.

INTERVIEW

Gregorio De Felice. First question I would like to ask you: we have seen an increasing trend in the number of satellites that are in orbit and the resulting problem of space debris. This requires an increasingly urgent solution. Should this solution be based on market logic or government regulation?

Simonetta Di Pippo. First of all, good morning everyone and thank you for this opportunity and also for this very interesting question.

Actually, in this case, I think it is a combination of the two: in the multilateral context, which is precisely the context in which the treaties were first approved, several decades ago, and then, recently, both the guidelines for mitigation in the production of space debris and the guidelines for the long-term sustainability of the space environment, guidelines that are subsequently in some way considered by all the major countries in the world, which then develop space activities in a consistent manner. It is a little less true for Emerging countries because clearly Emerging countries tend to launch maybe a few small satellites first and then, let's say, adapt to international regulation by adopting national legislation. But, the key point is that as the Space Economy develops, the number of private, commercial operators increases.

So if, especially in low orbit, say around 300/400 kilometres above our heads, orbits become congested, it is clear that commercial operators see their space assets, hence their satellites, in danger. Why? Because perhaps anti-collision manoeuvres with other satellites must be operated, this implies more fuel on board, a control centre that is always operational, this is of course always there, but obviously all this requires a higher number of operators. In short, operators must bear costs, but above all there is a potential danger, because it is clear that these commercial operators receive contributions and financing from venture capitalists, or in any case from private funds, and consequently they have a business plan and a plan for a certain number of years. If this is not respected, it is clearly a major problem.

Consequently, there is an interesting push from the bottom, i.e. precisely from the commercial operators, towards the United Nations member states to agree on a global type of regulation, because orbits are not national, they are not regional, but it is a global type of issue: when the satellite is in orbit, it is in orbit.

So there is an overall effort to try to arrive, at least, to establish principles, to begin with, on global governance, then on what is called the coordination of space traffic. On the other hand, we did it for aircraft, so it should also quite easily be possible for space.

Gregorio De Felice. That's good, thank you. So, there is a lot of emphasis on the need for regulation that cannot be solely of a single country or geographical area, but we also have, I think, an ethical issue, i.e. on the one hand we have economic opportunities, regulatory issues, but also the exploitation of resources.

Here the question is: do these elements contrast with each other, or not?

Simonetta Di Pippo. Yes, they actually oppose each other. If we look at the treaty, what we consider to be the basic treaty, which is the Outer Space Treaty, it makes it clear that space is the province of mankind, so it is practically available to all, it is a kind of common good, which we must also preserve, not only to be able to use it in our days, but also to preserve it for future generations. And it is also said that, in essence, the benefits of space, hence the utilisation of space resources, and by space resources we also mean orbits, must be available to everyone regardless of their level of social, economic and technological development. This in some way points to a process of democratisation of space and democratisation of space can obviously only happen if the cost of access to space decreases, which is kind of what is happening right now.

But to answer with an example: the example of SpaceX Starlink constellation that you mentioned earlier is precisely a mega-constellation. What is a constellation? It is a group of satellites, all of which are either similar or identical, that contribute to achieving the same result, so a telecommunication constellation is precisely a constellation that tends to improve terrestrial communications.

A mega-constellation is a constellation of thousands of satellites. Let's consider that Starlink, the constellation for broadband connectivity of Elon Musk, then of SpaceX, provides for 12,000 satellites for generation one and 30,000 satellites for generation two, for a total of 42,000 satellites. In this way Starlink practically covers the entire globe, thus bringing connectivity to everyone, everywhere.

If we look at the United Nations numbers, that were recently published in late 2023/early 2024 on how many individuals out of the 8 billion and more that we have become on the surface of the earth are not connected, we are talking about 2.5 billion, so a very high number. We may not realise it because we live in a society where we are, perhaps even too connected, if I may say, we are always super-connected, but there are very large regions, for example in Africa, especially in Central Africa or the Pacific islands, just to give some examples, where connection is practically non-existent. Therefore, we must always strike this balance between what could be the problems of orbit congestion, which could become, let’s say, a conflictual environment, something that obviously everyone will try and we are trying to avoid, but on the other hand there is really a push towards the society of knowledge and therefore towards democratisation, not only of the access to space, but also, let's say, of a sustainable socio-economic development for everybody.

Gregorio De Felice. Democratisation of space is a theme that you mentioned several times, as well as the notion that we can run the risk of transferring potential conflicts that we see today, for example, in international trade, into space, in the communication world. We talk about a policy of space data accessible in an open and free way. What benefits would this bring? Is this a correct approach seen through the eyes of a commercial operator?

Simonetta Di Pippo. This is another of the big issues that are being addressed at the moment. If we look, for example, at the Copernicus constellation, which is the Earth observation constellation of the European Commission, with a lot of support from the European Space Agency, because it is a co-funded project, and which monitors a number of parameters that are very useful for managing and understanding climate change in particular, well, actually there, from the very beginning with Copernicus, it was decided to have an open and free approach.

But what does this mean in practice? It means that it’s possible to follow a procedure to be approved and become authorised users, therefore users authorised to obtain this data, but the data obtained are raw data, so this implies that in-depth knowledge is needed and above all experts are needed, who in jargon are called the Geographical Information Systems experts, namely those experts who are able to extract the important elements from a certain satellite image, so from what Copernicus in this case is able to produce.

Now the interesting thing, though, is that the data can be used not only by a European, but can also be used by an African country, because, I repeat, the satellites are in orbit and somehow send back images not only of Europe, but of the entire globe. And this obviously applies not only to Copernicus, but to all similar systems. So if, for example, we could systematically do what is called ‘capacity building’ in jargon, namely create knowledge on how to use this data, then we would understand the impact on the socio-economic development of these countries.

If we look at it from the point of view of the sector operators, it is also clear that we probably need to make a qualitative leap, namely these operators will no longer just have to deal with extracting these elements from the images that are obtained, but perhaps provide immediate services to, for example, the Civil Defence, so that the Civil Defence can intervene when there is a natural disaster, especially in the emergency response phase, which is fundamental for saving lives more quickly, so here too it is a question of finding the right balance.

Gregorio De Felice. Let’s go back to Italy. What developments should our national ecosystem follow in order to remain competitive in the European scenario, but also in the global one? Where action needs to be taken above all?

Simonetta Di Pippo. Let's say I've been lucky enough to see Italy from both inside and outside, in the sense that I spent several years abroad and started my career at the Italian Space Agency. Now I'm back in Italy, so I can see the system from both perspectives.

Italy is a country that has great expertise and has had it since the beginning of the astronautical era. Among other things, this year, as we know, we celebrate 60 years since the first satellite was launched, San Marco, on 15 December 1964. We were the third country to launch a satellite after the Soviet Union and the United States so, certainly since then, we have been able to build up a competence, especially in manufacturing, but increasingly also addressed to services and applications, and in some ways we are a point of reference.

Actually, however, we are a point of reference that influences the world scenario less than it could, given the expertise.

So from what I can draw, given the experiences I have had, I think it’s missing, and we are going in that direction, we need to be a bit more strategic and inclusive. So we have to look towards the long term and at the same time we should try to inject a number of elements into the system that will allow the ecosystem to grow strategically but also in a harmonised way.

We have a fairly limited number of large companies and a very large number of small and medium-sized companies. And small and medium-sized companies need both to have an anchor customer that can be the large company, but also a very strong focus from public investment, because private investment is important, but we also need a strategic vision where, in some way, these small and medium-sized companies can develop harmoniously, also considering the fact that the world outside is going very fast, especially if we look at the American continent, so in particular at the United States, but China is not to be outdone, with different parameters. Obviously China is a different country from a political point of view, but even there they are developing this business concept quite a bit, in different ways from how we would do it in the western world, but certainly in an incisive way. So I would say: long-term strategies, but at the same time looking at the short term, also with the idea that we probably need to increase public investment and at the same time make it easier for private investors to invest in Italy. And if we can do this in a short time, actually, the skills are there: creativity is there, the manufacturing capabilities are undoubted, we could really become a major player.

Gregorio De Felice. In short, to paraphrase, given the topic we are discussing, we would need a North Star to guide the constellation of small and medium-sized companies involved in the Space Economy.

Professor, I thank you very much for your availability, for your points of view. All very clear and I hope to have you as our guest again.

Simonetta Di Pippo. Thank you.