Germany bids to catch China and US in trillion dollar space race

Neil Hodge

Thomas Jarzombek, the Federal Government Coordinator of German Aerospace Policy, announced in April 2019 that he is drafting laws to help position Germany as a major European centre for investment in space exploration and technology. Germany hopes to better compete in a market that some investment banks have predicted will be worth $1tn or more a year by the 2040s.

The new legislation would limit the financial and legal liabilities of private companies for accidents in orbit, set standards for space operations and offer incentives for new projects.

‘We are aiming for a lean basic law that is open to the future,’ said a spokesperson for the Federal Ministry for Economic Affairs and Energy (BMWi). ‘A national space law should focus above all on incentives and make it possible for the German space industry to play a bigger role in global developments.’

Space does not belong to individual states, so any legislative initiatives by individual states jeopardise a coherent international approach

Dr Grace Nacimiento
Vice-Chair, IBA Space Law Committee

Jarzombek is working with trade groups, companies and other experts on the draft legislation and plans to submit it to parliament after September 2019. Berlin is also pressing the UN to set standards for mining the Moon, asteroids and other objects in space.

Experts say advances in space are crucial for future technologies such as artificial intelligence and machine learning such as driverless cars. Companies likely to benefit from any future spending rise in Germany include satellite builder OHB SE and Franco-German aerospace group Airbus, which co-owns the maker of Europe’s Ariane space rockets.

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Companies and trade groups are pressing German authorities to establish a regulatory framework for the lucrative new market to encourage private investment. Some suggest Germany and the European Union more widely has been slow to realise the market’s potential. There are fears Europe will fall behind international competitors – namely, China and the US – in the new ‘space race’.

Euroconsult, a Paris-based space consultancy firm, published research in 2018 which found that global government investment in space exploration totalled $14.6bn in 2017, a six per cent increase on 2016. The US accounted for 74 per cent of the total. Germany ranked as the seventh largest investor.

Euroconsult believes the market to launch commercial satellites in the next decade will be worth $284bn, while Earth-observation data – and value-added services – could be worth close to $12bn by 2027.

In April, Dirk Hoke, CEO of Airbus Defence and Space warned that Germany and Europe are falling behind in space vis-a-vis China and the United States, suggesting this is a critical juncture for those hoping to keep up with them.

The new race to exploit space has only recently gained traction. For nearly 50 years after the introduction of the 1967 UN Outer Space Treaty – introduced to govern space exploration amid the heightened tensions of the Cold War – there was no impetus by any country to change or expand the Treaty.

In 2015 then-US President Barack Obama signalled regulatory changes by guaranteeing private companies rights to own, sell and profit from resources extracted from asteroids and other ‘celestial bodies’.

Other countries followed suit. In 2017, for example, Luxembourg became the first European country to enact legislation giving private operators assurances regarding the ownership of resources they extract in space and limiting their financial liabilities. The country also set up a €100m investment fund for projects.

Grace Nacimiento, Vice-Chair of the IBA Space Law Committee and a partner at Graf von Westphalen, highlights that in 2016 the BMWi sponsored a study which explored the conditions necessary for Germany to further the development and promotion of so-called ‘New Space’ activities to appeal to wealthy private investors.

There are several reasons why Germany wants to position itself as a major player in the space industry. ‘The key motivation is certainly the undisputed fact that space offers a wide range of opportunities for commercial activities to the benefit of national economies,’ says Nacimiento. The draft space laws would also be considered as a necessary legal basis to lure private investors into the market, adds Nacimiento.

Another motivation is that Germany’s competitors are already gaining ground.

For Nacimiento, the key question is how – and to what extent – legislation can help to create an environment in Germany to attract aerospace start-ups and promote the qualities identified as success factors. ‘Legislation may be one way to react to the rapid developments in China and the US, but it certainly is only one factor to be considered,’ she says.

Nacimiento is critical of countries drafting ‘national’ laws for an issue that is inherently ‘international’ and hopes that Germany does not do the same. ‘Space does not belong to individual states, so any legislative initiatives by individual states jeopardise a coherent international approach to the use of space for private commercial activities,’ she says. ‘In my view, the German government will bear this criticism of existing legislation in mind when drafting German space law and will try to avoid conflicts between the relevant international treaties on the use of space and national legislation.’

Enforcing legislation may be a problem. Given space law’s international nature, Nacimiento says enforcement would need to be entrusted to an international body. ‘However, the enforcement of public international law will always depend on the world community’s willingness to accept international enforcement mechanisms,’ says Nacimiento. ‘I do not believe that individual states rushing ahead will solve the issue of enforcing space law because the enforcement must be secured at international level. Individual states’ initiatives are prone to cause conflicts between states and within the world community.’