Benefits of being a member state of the European Space Agency
The European Space Agency (ESA) is an international organization with the focus on space exploration. ESA was established in 1975 and today the agency has 22 member states. ESA is an independent intergovernmental organization and the member states do not overlap with members of the European Union. Nevertheless, ESA is an excellent example how international cooperation in the space sector can work.
Estonia started as an ESA cooperating state in 2010, joined the ESA Convention in 2015 and is a full member since then. Often it is believed that being an ESA member state gives Estonia a strong brand and is good also for marketing purposes. Basically it is true and having the ESA quality sign is a very profitable thing not only for the country in general but also for the national industry. In this article I will explain the benefits and opportunities that associate with being part of ESA and I will use Estonia as an example.
Estonia had Parliament elections at the beginning of March 2019 and one of the regular topics, as every election has in agenda, is how to give growth to the Estonian economy. In my opinion long term economic growth is possible only with wise management and investments in our technology sector. ESA could be one of the main tools used to achieve it. Therefore, one of the options is to develop cooperation with ESA further and make use of all the benefits that such an organization can provide. One thing that we have to keep in mind is that all developments done through ESA should have a clear connection to space issues.
The next ESA ministerial council meeting will take place in Spain at the end of 2019. The ESA ministerial meetings, where new programs and plans are presented to the ministers, take place normally after every three years. It is the perfect time to subscribe to new programs and broaden the scope of the national space activities. Right now ESA is preparing new programs together with member states and delegations are raising new funding for them. At this time, it is always good to review what has been done during the previous period and to understand the potential outlook. Therefore, I have been studying the advantages of being an ESA member state and what have been the benefits for Estonia.
What are the benefits of being an ESA member state?
As I mentioned in the introduction, one of the benefits of being an ESA member state could be seen as better branding. Estonia is now a real space nation with launch facilities in Kourou and infrastructure flying on orbit. But what is the other advantage we will receive for industry and science?
Estonia has no national space agency of his own and it is unlikely that we would establish one in the near future. For Estonia ESA works like a space agency and today all of the Estonian space budget is channeled through ESA. There have been discussions that Estonia should manage a larger space budget by itself. Even I supported it at first, because then it would be easier to support national activities. The longer I have been working in the government and with ESA, I understand the advantages of ESA and how it creates more value than it actually costs.
ESA guarantees geographical return for investments, it means that the Estonian contribution can only be used in Estonia and ESA has to guarantee that projects come back to the region. This kind of a system protects small players and companies who are entering the space market, so they can develop their strengths and new products further. For example, the European Union Space Program has no return guaranteed and for smaller companies it will be difficult to get any projects.
It is often said the ESA is too expensive. But on the other hand member states will get access to technical expertise and infrastructure. Especially small states and their industries gain the most out of it, because it would be far too expensive to hire and keep experienced technical staff and build facilities that would be used maybe just a few hours per year.
One of the biggest values is that member states can participate in ESA science missions. Science missions are very expensive and no country alone would finance a mission like that by itself. With the help of ESA smaller states can easily help their research institutions and industry to participate in science missions. It is beneficial to make long-term investments for the continuity of the technology sector, it gives growth to the potential of spin-offs and of course creates good outreach and publicity.
ESA evaluates the level of technology and its potential. The agency gives a guarantee for member states whether the technology developed by its institutions or industry is legit or not. ESA has the unique knowhow and expertise. Delegations can work together with ESA to create a specific national roadmap and industry policy, so the government could take out the maximum return from the investment and have a long term plan.
In addition to governments, ESA helps investors to evaluate which companies are serious and if the technology developed is ready for an investment. The main challenge is that most of the investors lack of knowledge about space sector or specific technologies in general. ESA gives here some kind of a security that if a company is cooperating with ESA then the technology created is novel and unique. What we have seen in Estonia is that ESA projects most likely will receive funding. I would say that investing into ESA optional programs helps to attract more private capital to technology sector.
ESA projects will not only attract venture capital funding to startups, but motivate already well established industry to invest more into R&D, to develop new products and services. It lowers the risk of failure and gives co-funding which motivates to invest. Companies see the value in ESA projects and understand that ESA is more like a partner for R&D, but not a client.
ESA Business Incubation Center (BIC) program is another excellent benefit that comes with being a member state. Startups, who have applied for the ESA BIC program, will be evaluated along with their technology and potential by ESA technology transfer program together with local ESA BIC team. Accepted startups will receive 50k€ equity free funding and access to the ESA BIC network. ESA BIC startups have a very good track record and a high success rate. Right now we have eight very promising Startups in ESA BIC Estonia and the number is growing.
It is often said that ESA projects are only meant for a niche market, so just a few players will benefit out of it. This statement is monumentally wrong! Companies doing business with ESA could be divided into two: rotating partners and long-term partners. In Estonia we do not have large system-operators who would be a long-term partner. In case of Estonia companies initiate a few projects to develop technology. They normally come from a different industrial sector than space and validate their technology in space, or develop a new service based on Earth Observation, or satellite navigation technologies. In this case the economic benefits will be higher since the ESA project will be used mainly to bring new products or services to market. This way many companies will benefit from the membership and more products are being developed.
If we look at ESA membership as a short-term investment, then the country will get the investment back through taxes, because most of the money will be spent on salaries and companies will have to invest more for themselves. In long-term the benefits will be higher than just taxes, because new products and services will be developed, which will more likely generate revenue from export. In case of Estonia it is very difficult to bring exact long-term numbers today since we will start realizing the effects in five plus years.
Conclusion
ESA is an excellent partner for governments and industry who constantly want to develop new technology based products or services. All ESA projects should have a connection to space, but it does not mean that only classical space industry will benefit, the economic effects will be much greater. In addition, ESA offers a wide range of the expertise and technical knowhow that member states can access. Investing into development of new technology based products will create more revenue, rise the competiveness of the industry and higher tax return for the country. Therefore, ESA can be seen as an excellent investment for the future. But it is up to the government and national delegation to take the maximum benefit out of the membership.
On a global scale and in the space sector ESA is a good example for international cooperation, where all members are handled equally. It will be relevant for future challenges like space traffic management and exploration of outer space.
ESA is one amongst the potential tools to manage these investments. For me it will be of extreme importance that Estonia would follow the road started already and take the maximum out of the ESA membership. Now it is up to the new government to decide how we will continue.
