2024 Draghi Report: The Future of European Competitiveness in Space

On 9 September 2024, Mario Draghi, former President of the ECB, former Prime minister of Italy, and a Special Advisor to the President of the European Commission, presented the much anticipated report on the future of European competitiveness, outlining a common strategy and providing recommendations on sectoral and horizontal policies.

In his address to the European Parliament on September 17, Mario Draghi highlighted:

Space has been recognised as a key competitiveness sector, in which Europe has begun to lose ground, despite leading it for decades. Draghi paints a not so optimistic picture of the state and future of the European space sector unless action is taken, showcasing a growing dependency on foreign space-fairing nations on access to space and import of high-end electrical components. EU lags behind in rocket propulsion and mega-constellations for telecom, especially in regard to SpaceX and its successful Starlink service.

State of the space sector and noteworthy processes

The report notes that the global space sector currently grows on average by 9% per year, est. to reach USD 1.8 trillion by 2035. Currently, the space sector generates an added-value est. at over USD 3 trillion. This growth is facilitated by the increasing number of private actors, causing a deep structural change.

Europe still holds significant industrial capabilities and know-how in systems and subsystem design, assembly and integration. The flagship components of the EU Space Programme have made Europe a leader in activities, relating to Earth Observation, satellite navigation, and space exploration.

However, the European space sector has become highly dependent on imports of high-end electronic components and relies on foreign companies for access to space. Noteworthy is that the mega-constellations for telecom market is dominated by the US, namely SpaceX’s Starlink.

Root Causes of the competitiveness gap

The report identifies 7 root causes for the competitiveness gap with emphasis on challenges relating to the access to finance. Most of these causes seem to be linked to the lack of clear EU strategy in the sector and a well-established governance model to coordinate R&D efforts and development of infrastructure and capacity-building, public funding and ensuring access to finance.

1. Lower public funding for space policy which is key for infrastructure and establishing competitive markets

2. Lack of coordination among member states when it comes to funding, development of capacity, and R&D

3. While home to world-leading research institutions and universities, Europe provides insufficient R&D investment

4. European space companies have limited access to finance and public contracts

5. A complex and fragmented governance model with multiple institutional actors

6. at the national and European levels

7. There is an untapped potential for coordination and synergies between space and military activities in the EU

8. Strong international dependency for access to space and vulnerable supply chains for raw materials and critical tech

The Future of the European Space Sector

The Draghi report proposes 3 objectives to be included in an European Space Strategy:

1. Guaranteeing European sovereignty in autonomous access to space, defence capabilities, and key space applications for society, such as telecommunication, Earth Observation, navigation, and security

2. Maintaining or achieving world-class industrial leadership in selected areas and emerging space-based industrial segments

3. Enabling innovation and the scaling up of successful European market participants