At a Dec. 18, 2024, ESA council briefing, the Director General, Josef Aschbacher, said the agency would strive in 2025 to “simplify’” the long-standing principle of geo-return. According to that principle, ESA pays back to each country in industrial contracts the value of what it gives to the agency. If France gives 100,000 euros to ESA, ESA gives France 100,000 euros. It’s a policy that ensures fairness. But it’s also one that has come under fire. As recently as September, Mario Draghi, in his “Future of European Competitiveness report,” blamed geo-return for Europe’s failure to “react to the global technology evolution,” citing a downturn in its space industry’s commercial and export sales. Geo-return, critics claim, hurts competitiveness.
The good news, for those critics, is that a different approach is being tested. “Fair contribution” involves allowing companies to compete for projects, and then letting member states make contributions based on how their companies did. ESA will have companies compete to build launchers, an industry in Europe industry that which Draghi said was “in crisis”. Funding will be allocated in line with the results of the European Launcher Challenge. Industry can form consortia and propose to ESA based on that. ESA will then prepare formal procurement proposals to member states for funding based on those plans from industry.
Importantly, Europe here is working on how to establish the right bureaucracy rather than how to get more funding overall. The smallest amount of money typically awarded to contractors by NASA is close to the largest given by ESA. There is a night-and-day difference in funding between the world’s biggest space players and Europe. Making the continent competitive is crucial, but it’s still only half the battle. If Europe wants to be independent — if it wants to reach its long–term, greatly prized goal of “strategic autonomy” — it must attract more investment. For the critics, relaxing geo-return could even obscure this need for funding.
At present, many space startups, especially those making defense products or products with dual-use applications, are still viewed with suspicion by government and public agencies in Europe. They’re often seen as untested, unproven and therefore not worthy of sizable investment. That’s a problem, because many space startups develop technology or products with defence applications; the two areas often overlap. Growth-stage companies, equally, struggle. Lack of available funding causes companies to stagnate. Because Europe has exceptional education and research institutions, producing world-class talent and technology, the continent has become a hunting ground for the United States and Asia, which will back talent and support innovation so that they flourish. European talent ends up supporting the space industries elsewhere at the expense of our own.
Another key reason for this is Europe’s lack of programs like the U.S.’s DARPA, which provides significant funding to startups working on critical, high-impact technologies. This financial support is crucial for startups, as it not only supports growth but also attracts additional venture capital and debt funding. Addressing this gap could be vital to reinvigorating Europe’s space ambitions and fostering a thriving ecosystem for innovation within the continent.
This is becoming a pressing necessity. The new pace Race is growing more competitive. Countries like India, Japan and Europe are all competing to go to Mars. Under a Trump administration of which Elon Musk, head of SpaceX is part, we can expect the U.S. to double down on private space and its role in, for example, the Artemis program. ESA risks becoming pushed to the sidelines. Given the overlap between space and defence, with space companies producing materials, communication methods and other dual-purpose technologies, this makes Europe vulnerable. ESA has to strengthen its commitments, be open to making changes, become less reliant on NASA — or risk getting left behind. If Germany, France and the United Kingdom were to use their soft power and clout to press for greater progress in European space, that could happen.
Will fair competition and relaxing geo-return reinvigorate Europe’s space ambitions? It certainly signals a change of attitude at the agency, one that reflects present realities and isn’t content just to continue what was done in the past. In a sector like space, which grows more and more strategic, and in which companies are always innovating, a flexible approach is required to stay competitive.
But the brutal truth is that no, fair competition and relaxing geo-return will not reinvigorate European space ambitions. Indeed, the shift I’ve discussed is a mere drop in the ocean in terms of its effect. It won’t lead to funding on a level that is anywhere close to where it needs to be. Direct government payments still go to the big companies and not the startups. European startups are still left unable to generate revenue with government contracts, either during R&D or production. This has to change. And it has to change fast. We need a transformation of approach, and a transformation at the level of culture. Unless we bring down barriers, address bottlenecks and start moving funds towards Europe’s space startups, then the continent’s ambitions will remain unfulfilled.
Robert Brüll, is the CEO of FibreCoat, which manufactures super-resistant, radiation-shielding materials with applications in the space and defense industries.
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