The report Space Possibilities for Our Grandchildren: Current and Future Economic Uses of Space, published by the European Commission’s Directorate-General for Economic and Financial Affairs, offers a detailed exploration of the emerging economic potential of space. This report provides a comprehensive analysis of the forces driving space as a commercial frontier and outlines a taxonomy of economic activities that could become significant in the coming decades. The paper challenges the historical perception of space as solely a realm of scientific exploration or military operations, presenting it instead as an economic domain with vast, untapped potential. This article expands on the report’s themes, exploring how space’s evolving accessibility and technological advancements are opening new economic opportunities, and how these developments might shape the future global economy.
Space as an Economic Domain
For much of the past, space exploration was driven by geopolitical rivalry and scientific curiosity, with significant government funding supporting projects like the Apollo moon landings. In the context of the Cold War, space became a battleground for demonstrating technological and ideological superiority, but these early space ventures were largely disconnected from the global economy. The investments were seen as an extension of national security or scientific endeavors, with little thought given to their commercial viability.
However, the economic landscape of space began shifting in the late 20th century. The commercialization of satellite technology, for instance, demonstrated that space could become a domain where economic value could be generated. Today, space is recognized as an emerging economic marketplace, attracting not just government programs but private sector investments. Companies in the United States, Europe, and China are taking the lead, developing commercial ventures that range from satellite services to space tourism and in-space manufacturing.
One of the key drivers behind this transformation has been the steep reduction in launch costs, as highlighted in the report. Historically, space access was prohibitively expensive, which limited the scope of economic activities. The report notes that as recently as the 2000s, launching payloads into low-Earth orbit (LEO) cost roughly $15,000 per kilogram. This placed significant constraints on what could be economically viable in space. However, technological innovations, particularly in reusable rocket technology pioneered by companies like SpaceX, have drastically reduced these costs. By 2023, the cost per kilogram had fallen to approximately $4,000, and projections suggest that by the 2030s, this cost could drop to as low as $1,000 per kilogram.
This dramatic decline in launch costs parallels similar cost reductions seen in other transport revolutions. In the 19th century, for example, the introduction of steam-powered ships slashed trans-Atlantic freight costs, opening up global trade routes and contributing to the first wave of globalisation. In a similar way, as space launch costs decrease, the economic friction of accessing space is falling, making new markets and industries viable.
Cost Reductions and Space Accessibility
The steep reduction in space access costs has not only opened the door to new commercial ventures but also reshaped the competitive landscape of the space economy. In the past, space was dominated by government agencies like NASA and the Soviet Union’s space program. Today, private companies are playing a leading role, with significant involvement from nations across the globe, including Europe, India, and China. This shift is partly due to the decreasing cost barriers and the increasing interest in space as a commercial domain.
The report highlights the importance of reusable rocket technology in achieving these cost reductions. Companies like SpaceX have developed rockets that can be reused multiple times, significantly lowering the cost of sending payloads into orbit. Previously, rockets were single-use, which meant that the entire cost of the rocket had to be accounted for in each launch. With reusability, the cost per launch decreases with each successive mission, making space more accessible and economically feasible.
The decreasing cost of launching payloads into space has also led to a surge in satellite deployments. Between 2005 and 2022, the number of satellites launched annually increased from 47 to 174, and by 2023, over 2,600 new objects were launched into orbit. These figures highlight how rapidly space has become a domain of economic activity, with satellites now playing a crucial role in industries ranging from telecommunications to Earth observation.
The trend of decreasing launch costs is expected to continue, and the report draws on historical data to project future trends. By applying Wright’s Law, which predicts that costs decrease as experience with technology grows, the report forecasts that launch costs could drop to less than $1,000 per kilogram by the late 2030s. This would open the door to previously unthinkable economic activities, from large-scale space tourism to asteroid mining and in-space manufacturing.
Measuring the Space Economy
While the economic potential of space is vast, measuring the actual size of the space economy remains challenging. Traditional economic measures struggle to capture the breadth of activities related to space, which range from satellite services to speculative ventures like asteroid mining. According to the Organisation for Economic Co-operation and Development (OECD), the space economy encompasses all activities that create value through space exploration, research, and utilisation. However, this broad definition can sometimes inflate the perceived size of the space economy by including terrestrial industries that depend on satellite technology.
The report Space Possibilities for Our Grandchildren suggests that a more nuanced approach is needed. It differentiates between Earth-based industries that use space-related technology, such as satellite-enabled services, and actual space-based economic activities, like in-space manufacturing or orbital tourism. This distinction is important for understanding where the real economic growth in space will come from. For instance, while satellite-enabled industries like telecommunications are already well-established, the next frontier of economic growth in space will likely come from activities that take place in space itself.
Estimates of the global space economy vary depending on the methodology used. For instance, the Space Foundation estimates that the space economy was worth approximately $550 billion in 2022, while other organisations, such as Bryce Tech, offer more conservative figures around $380 billion. Despite these differences, all estimates point to significant growth, driven by the expanding range of economic activities in space and the falling cost of access.
Taxonomy of Economic Activities in Space
The report proposes a taxonomy for classifying economic activities in space, dividing them into three main categories: pure uses of space, space tradables, and space consumables. These categories help to clarify the different economic roles that space-based activities can play.
- Pure Uses of Space: These activities can only take place in space due to its unique environment. The best-known example is scientific research, particularly experiments that require microgravity. Space tourism also falls into this category, as the experience of zero gravity cannot be replicated on Earth. Pure uses of space represent activities for which there are no substitutes on Earth.
- Space Tradables: These are goods and services that could be produced either in space or on Earth but may be more efficiently produced in space under certain conditions. For example, microgravity can enhance the production of certain high-tech materials, such as fiber-optic cables or pharmaceuticals. Space-based solar power is another potential application, as solar panels in space could generate much more energy than their Earth-based counterparts. These activities are contingent on further reductions in the cost of space access.
- Space Consumables: These goods and services are produced in space for use in space. As human presence in space increases, the need for resources like fuel, water, and food will grow. These could be produced on Earth and shipped to space, or produced locally using in-situ resource utilisation (ISRU) techniques, such as extracting water from the Moon or manufacturing solar panels on Mars. The report suggests that space consumables represent an important part of the future space economy, as they will reduce the need for costly resupply missions from Earth.
The Expanding Role of the Private Sector
Another key theme in the report is the expanding role of the private sector in space exploration and exploitation. While governments will continue to play a significant role, particularly in scientific research and national security, the private sector is increasingly driving innovation and investment. Companies such as SpaceX, Blue Origin, and Rocket Lab are leading the charge, developing new technologies and services that make space more accessible and economically viable.
The report emphasises that this shift towards private sector dominance in space is already underway. For example, more than 80% of satellites in orbit today are commercial, demonstrating the private sector’s growing influence. Additionally, private companies are leading the development of commercial space stations, which are expected to replace the International Space Station (ISS) by the end of the decade. These commercial stations will provide a platform for scientific research, manufacturing, and even tourism.
Summary
The economic possibilities of space are vast and expanding rapidly. The report Space Possibilities for Our Grandchildren outlines how declining launch costs, technological innovations, and the growing involvement of the private sector are transforming space from a scientific frontier into an economic domain. With new markets such as space tourism, in-space manufacturing, and asteroid mining on the horizon, the future of the space economy looks promising. As space becomes more accessible, the economic opportunities for future generations will continue to grow, potentially reshaping global industries and the economy at large.
