Impact assessment

Impact evaluation of UK investment in ESA (executive summary)

Updated 7 November 2022

1. Introduction

The European Space Agency (ESA) is an important route for the delivery of UK government objectives for space; a significant proportion of the UK’s public investment in space is made via ESA - around 75% of the UK Space Agency’s annual budget is allocated to ESA each year.

Within the current five-year investment period, agreed at the ESA Ministerial Council in November 2019 (CMIN19), the UK’s annual contribution of €420-450m represents around 10% of ESA’s ~€5bn annual budget. The UK is now one of ESA’s top four contributors along with France, Germany and Italy.

The UK Space Agency is committed to ensuring that UK investments made via ESA are properly evaluated and the development and implementation of a monitoring and evaluation (M&E) framework was a condition underpinning the approval of the business case for UK’s ESA funding commitments made at CMIN19 and is a commitment of the UK Space Agency 2020/21 Corporate Plan.

2. M&E design and timescales

The M&E framework covers the eight core ESA programmes. It has been designed to cover the five-year CMIN19 investment period but could equally be applied to future investment periods.

The framework is a theory-based approach centred on a theory of change (ToC) for ESA investments, combining quantitative and qualitative data and analyses to (i) provide evidence of the outputs, outcomes and impacts generated by ESA investments and (ii) test and validate the expected pathways to impacts to assess attribution and additionality.

Four large ESA programmes:

• Space Science (mandatory programme)
• Telecoms & Integrated Applications (TIA)
• Earth Observation (EO)
• Human & Robotic Exploration (HRE)

Four small ESA programmes:

• General Support Technology Programme (GSTP)
• Space Safety and Security (SSS)
• Navigation Innovation and Support Programme (NAVISP)
• Commercial Space Transportation Services (CSTS)

Investment in space R&D and innovation and the development of space infrastructure is a long-term endeavour. ESA missions and infrastructure can take 10-15 years to develop and span several of ESA’s five-year investment periods, and will then be operational in space for a similar length of time after launch. Therefore, the majority of investments being made in the five-year CMIN19 period will not start generating outcomes and impacts until some time after the period has ended.

2.1 Inputs (CMIN19 investments)

The UK has committed €2,114m to ESA for the five-year period from Jan 2020 to Dec 2024. This includes commitments made at the ESA Ministerial Council in late 2019 (CMIN19) and on-going commitments made in 2016. 90% of the budget is assigned to the four large ESA programmes: Science, EO, TIA & HRE.

ESA contracts with a total value of €392m have been let to 255 organisations in the UK between Jan 2020 and Jun 2022. This represents 19% of the €2,114m committed to ESA (or 25% of the total value when the carry-over expenditure from the CMIN16 commitment is excluded). While this suggests that contracts for the UK may be running behind schedule, a number of large contracts are expected for UK organisations in the Science, EO and HRE programmes that will change the total value considerably.

88% of contracts are with industry and six companies account for 50% of the value of these contracts. This pattern of investments reflects the concentrated structure of the UK space industry.

Industrial co-funding is required under some ESA programmes and, for contracts let to date, it is estimated to be of the order of €145m

2.2 ESA added value

There is considerable added-value to working via ESA and widespread agreement among stakeholders regarding the principal types of added value that derive from the UK’s national membership of ESA. This has been confirmed by evaluation interviews, surveys and literature reviews.

Scale and indivisibility

• Minimum scale of public investments required to be a space-faring nation is enormous, such that for an economy the size of the UK, going alone is not feasible.

• Bilateral arrangements might offer an alternative, but the majority of our current relationships with NASA, JAXA, CNES are a result of our ESA membership. While a small number of UK instruments might be attractive for individual US, Japanese or Chinese missions the extent and breadth of access to missions would likely decrease.

ESA in-house coordination and technology capability

• The strategic coordination and technical capability within ESA far exceeds the capacity one might expect to establish in the UK.

• ESA has established a series of coordination, management and operational structures to design, project mange, launch and operate missions – that far exceeds anything any other European country has in place.

• It is value-adding and hugely valued by the UK community. It would be challenging to replicate these international mechanisms within a national agency.

UK space economy

• Many of the key ‘upstream’ space players are EU-headquartered businesses that maintain subsidiaries in the UK in part to maximise their access to ESA contracts.

• These foreign-owned businesses account for a majority of R&D investment and innovation in the space sector (itself a high investor in R&D) and support wider UK supply chains and labour markets.

• Any reduction in UK investment in ESA would likely lead to a switch in new investment by these companies from the UK to other ESA member states.

There is also evidence of high levels of attribution of outputs and outcomes for ESA contractors. ESA contractors report that a high proportion the outputs and outcomes generated to date would not have happened without ESA investment.

Also, from an industry perspective, there are limited other forms of public support for R&D and innovation activities in the space domain, giving them limited alternative options to work on leading-edge space technologies and applications. The ESA investment supports many of the key UK space companies at some point and also supports new entrants via programmes such as GSTP, SSS and CSTS - providing funding and opportunities to conduct R&D and innovation activities to explore and develop technologies and build and enhance high-value skills.

Our detailed examinations of the theories of change (ToC) at programme level validated the expected pathways from UK ESA investment and activities to outcomes and impact - suggesting that future benefits will be generated. These benefits will not be wholly attributable to UK ESA investments as other private (and possibly further public) investment and actions are required to develop, commercialise and operate space infrastructure and develop and commercialise space applications.

3. Key achievements to date

New knowledge

Scientific impact is expected but yet to materialise. The Science, EO and HRE programmes support space missions that aim to generate new knowledge about the Earth, Solar System and Universe. The majority of scientific impact (new knowledge) from missions being developed during the CMIN19 period will not arise until missions are launched and making observations.

The baseline data collected in this study shows that the majority of the UK’s ESA-related space publications arise from the Science programme (84%) and that the UK publications are growing in quantity (number of papers) and increasing in quality (citations). Furthermore, the UK also has a strong performance in international co-publication rates and the rate of publications per £ invested compares favourably to other key space-faring countries.

ESA’s science-based programmes play an important role in terms of outreach. It provides interesting and exciting content for outreach activities to engage the public and inspire young people, especially in terms of choosing subjects in science, technology, engineering and maths (STEM) for study and for careers. The evaluation developed a baseline for higher education enrolments for three groups of relevant courses (space-specific, space-related and wider physical sciences and engineering) which will allow tracking longer-term outcome of activities directed at school children. As the activities target children from primary school to sixth, the effects of these activities will materialise over timescales from 2-12 years.

3.1 Innovation

There is a broad range of innovation activities supported by ESA contracts – from developing innovative spacecraft, components and systems for specific ESA missions to exploring innovative technologies with the potential to support future ESA missions in the longer term and developing innovation applications of space infrastructure.

Although many of the contracts are still in progress, a wide range of direct outputs have already been generated in terms of progression of technology readiness levels, new products and services, and skills. Evidence on patents and spin-outs is rather limited, but in line with the expected time lags of R&D and innovation activities.

ESA contracts have supported (and will continue to support) collaborations and new strategic partnerships. Current ESA contracts directly support large numbers of collaborations; 88% of contractors reported at least one form of collaboration. Furthermore, a third of contractors (34%) reported developing new significant international strategic partnerships as a result of their ESA contracts (in Europe and beyond).

The initial innovation outputs have translated into early economic gains for the UK Space Industry. 32% of ESA contractors reported (via a survey) follow-on sales already achieved from products, services and the capabilities developed within their contracts, with the sales leading to the creation and/or retention of employment. 60% expect follow-on sales in the future. These follow-on sales are due, in part, to reputational effect of working with ESA, with UK ESA contracts perceiving that having the ESA ‘badge of approval’ allows demonstrating high levels of technical and professional capabilities and quality which are particularly valuable in international markets.

Wider innovation and usage benefits (spillovers)

There is a high expectation from stakeholders as to future socio-economic benefits of missions being developed under CMIN19. These include environmental protection and security of space assets in particular, but also in the security of assets on Earth, productivity and improved public policy design and delivery and benefits in health, welfare and utility.

Examples of wider innovation and usage benefits

EO missions with UK contributions will provide improved assessments of Essential Climate Variables including CO2 (e.g. TRUTHS, CO2M) missions) and better data for weather modelling and ecology mapping, water, agriculture and forestry management, predicting and managing natural disasters (e.g. HydroGNSS, CHIME. LSTM, ROSE).

TIA is supporting the reach and applications of 5G, providing additional capacity from space and increased coverage to support increasing demand for communications and data capacity for applications from IoT to autonomous vehicles. The TIA IRIS partnership will support increasingly digitally driven and more effective management of airspace.

Contracts under the TIA Business Applications and Space Solutions programme are supporting the development of innovative applications in a wide range of domains using existing operational space infrastructure. The majority (65%) are using data from EO space assets, with others using satellite communications capabilities (22%) and satellite navigation (7%). An assessment of these expected benefits is presented in the ‘Economic assessment’ section.

3.2 Global influence

As the fourth largest investor in ESA (out of 22 member states), contributing 10% to the total ESA budget in the CMIN19 period, the UK has considerable influence within ESA. The UK Space Agency plays a full and active role at a political level and in all of ESA’s formal governance structures. In addition, the UK is disproportionately over-represented within ESA’s scientific advisory structures and had a central role in the recent development of ESA long-term scientific strategy Voyage 2050. Globally, ESA is one of the largest civil space agencies (in the top three), giving the UK an additional pathway to international influence in the space realm over and above its national influence.

Nevertheless, ESA contractors would like to see even more UK leadership and influence: only 50-60% of ESA contractors think that the UK is well-represented within ESA senior leadership and that the UK’s space sector’s capabilities and needs are reflected in ESA strategy.

3.3 Security and protection

CMIN19 investments are also developing new capabilities to support a range of future applications in security and protection. The ESA EO missions in development with significant UK contributions, such as CO2M, HydroGNSS and TRUTHS, will add to the space EO capabilities, with CO2M and TRUTHS in particular increasing the accuracy and robustness of the internationally agreed essential climate variable (ECVs). Timescales to impacts vary (depending on the phase of development of missions): HydroGNSS and CO2M will launch during the CMIN19 period and TRUTHS will not launch until 2029.

The UK is also a major contributor to the SSS programme, both clearly aligned with UK’s national priorities in space security (protecting space assets from space debris and protecting terrestrial assets from significant space weather events). Demonstration debris removal and clean space missions will launch during the CMIN19 period and the space weather mission (Vigil) will not launch until at least 2030.

3.4 Contributing to net zero

Historically the focus of ESA and USKA where climate change is concerned has been the development of space missions and infrastructure to inform our scientific understanding of climate change and monitoring key climate change variables (i.e. contributing data for Essential Climate Variables) through the EO programme. This continues in CMIN19 and the UK is building on its expertise in this field and contributing to key missions such as CO2M and TRUTHS. These climate change-focused activities do not directly move us towards net-zero by actively reducing CO2 (or other greenhouse gases) in the atmosphere but do play a critical role in monitoring progress at a global level.

In terms of generating positive effects (and potential effects) on net-zero within the UK space sector there are a number of options:

• As an energy intensive sector, the space industry currently makes a negative contribution to net-zero. UKSA can continue to support ESA’s clean-space activities targeting reusability of space hardware and more sustainable fuels and the small initiatives exploring options to reduce the carbon footprint of the space sector. However, any returns from these activities may be out-paced by wider UK initiatives to de-carbonise the UK energy system and the balance of effort and investment needs further consideration before actions are decided.

• The UK Space Agency could target a proportion of investment in space applications (supported via ESA’s TIA/ BASS programme) on products and services that can make a positive contribution to net-zero or, at a minimum, creating a UK criterion for applications projects to explain the positive (or negative) contributions their proposed activities would deliver from a net-zero perspective.

3.5 Contributing to levelling-up

As a new policy, levelling up was not part of the UKSA proposals for CMIN19 and there are no specific objectives whereby investments in ESA programmes might be considered in terms of their implications for shifting the balance of economic activity within the UK. The current UK space industry is concentrated in the south (65% of headcount in the SE, SW, London, East of England) with a growing activity in Scotland (17% of headcount) and this concentration is largely reflected, although not entirely, in the distribution and benefits of ESA contracts. The geographical distribution is the result of the history of industrial development of the aerospace sector and its supply-chain, who remain the recipients of the majority of ESA investment.

The established geographical distribution will not change dramatically in the near future, as there are high barriers to entry for winning ESA contracts and the existing major players are committed to the UK. The degrees of freedom are further limited by the fact these major players are often the anchor companies for regional space clusters.

This does not preclude opportunities for the UK Space Agency to use ESA programmes to contribute to the levelling-up agenda building on a range of activities already underway:

• The smaller ESA programmes such as CSTS and SSS are supporting (and can further support) the emerging private sector space launch and clean-space activities clustered around the UK’s developing spaceports in Cornwall, Scotland and Wales.
• The UK can also continue to support the development of the Goonhilly Earth Station in Cornwall, via the ESA HRE programme, as world’s first commercial deep-space communications.
• The UK can continue to support and/or increase support for, existing and new entrants to the small satellite and small-sat constellation segment via the TIA, EO and GSTP programmes as well as space applications businesses (via TIA) who are not bound by the locations of the traditional space sector.

3.6 Economic assessment

In terms of GVA, we estimate that the total return on investment from CMIN19 will be 1:11.8, based on projected spend for CMIN19 investment period, ie. each £1m invested will generate a return of £11.8m, over time. If we take into account ESA overheads (~20%) this ratio is 1:9.8. We also estimate that the projected spend for the CMIN19 investment period (£1.69bn) we estimate a total projected net additional income of £5.75bn (in cash terms), for the period 2020-2036 (i.e., £0.50bn per annum). Additionally, £14.2bn are expected to materialise in the long-term via spillover effects.

In terms of employment, we estimate that the return of investment is 1:9.8, meaning that each £1m spend delivers 9.8 person years employment (emerging from direct and indirect effects, and benefits from ESA-derived activities). If we take into account overheads (~20%) this ratio is 1:8.2.

We also estimate that the projected spend for the CMIN19 investment period (£1.69bn) we estimate a total of 16,524 person years employment. For reference, total employment in the UK space industry was 45,000.

in 2020, based on headcount, suggesting that employment support by ESA contracts will represent an important driver to support and sustain employment in the sector.