On June 11, Office of Space Commerce Director Kevin O’Connell participated in a discussion of “The New Space Economy: Achieving Value and Reaching Potential Together,” part of the “From Home to Space” series sponsored by the Italian Space Agency and the American Embassy in Rome. Below are his remarks as prepared for delivery. Matthew Hilgendorf from the Commerce Department’s International Trade Administration participated in the event as well.
Good afternoon. Thank you, Marlene and Matthew for that kind introduction and thank you for all coming together virtually for this event.
I’d like to extend special thanks to my colleagues at the American Embassy in Rome, including our own International Trade Administration, our Consulates in Milan and Naples, and, of course, to the Italian Space Agency for putting together this event, and for adapting circumstances to allow it to still take place.
We are living in unprecedented times, but times like these are important reminders that we are still bound by common goals, and that we can still accomplish an incredible amount through modern technology. It also reminds us that science and commerce are key connectors, and that space continues to inspire and motivate people around the world.
My name is Kevin O’Connell, and I am the Director of the Office of Space Commerce at the US Department of Commerce. That title, Office of Space Commerce, sounds something that might be a modern creation, but in fact the Office was established over 30 years ago.
My office is the principal space policy coordination office within the Department of Commerce, but we are also the Executive Branch advocate on behalf of the U.S. commercial space industry. We work every day to foster the conditions for the growth and technological advancement of the industry.
One of the other core functions we have is to leverage the many other capabilities and talents across the Department. So we work with organizations like the International Trade Administration, represented here and around the world, but also with NOAA, with NIST, and other Commerce organizations.
Why is this important? Because space capabilities are central to our lives in so many different ways. From improved internet access to finance and entertainment, to a better understanding of crop growth and weather patterns, space technologies are improving our daily existence, and becoming even more critical to it. One industry study places the economic value of space at $5T across a wide range of sectors. But how we access space and what we are able to accomplish in space is changing.
Think about it. Even as we navigate the complex COVID pandemic, past space investments are enabling efficiency of response and recovery. Badly needed supplies are able to efficiently get to where they are needed most, and space is allowing the remote monitoring of infrastructure and facilities in ways that keep people safe. Indeed, right now, this call, is enabled by space communications, as are the key areas of telemedicine and distance education for our children.
And many in the space industry have contributed even more directly during the crisis, by converting manufacturing facilities to make supplies like respirators and masks.
Even as the global space industry, as one of many, navigates this crisis, we have been inspired by a continuing focus on long-term opportunities and benefits in space.
I’d like the congratulate NASA and SpaceX on their recent launch of two American astronauts from U.S. soil on a U.S. rocket – the first time that has happened since 2011. Not only was the launch successful, SpaceX successfully landed the rocket’s first stage on a barge in the ocean.
This was not just a big step for the U.S. space program but a very big signal about the growing importance of the commercial space sector. And a powerful sign about the value of new approaches to government-industry collaboration.
What’s actually happening? What we are witnessing, what some of you are directly participating in, is the application of commercial business practices and efficiencies to traditional government space models. And that is resulting in concepts like reusability, lean manufacturing, continuous learning, and others that are lowering the cost of space activities. The economics of space is changing.
It is incredible to look back at the innovation and expansion in the commercial space industry over the past decade. Once the exclusive purview of governments, roughly 80% of space activity is now commercial in nature, and that number is only increasing. At Commerce, we see the future of space as overwhelmingly commercial.
Currently, the space industry is valued at over $400 billion globally. However, major financial institutions such as Bank of America, Merrill Lynch, and JP Morgan predict that by 2040, the space industry will be worth between $1 and $3 trillion.
Those numbers are not purely aspirational. What we can now see are a number of key factors that will enable that kind of growth. I’d like to spend a little bit of time on those factors today.
First, we need to encourage continuous entrepreneurship and innovation in the commercial space industry. Space startups are popping up all over the world, creating new technologies and services that will redefine traditional space markets, and helpfully impact life on Earth.
One of the best things about our job in the Office of Space Commerce is the number of entrepreneurs that cross our doorstep. These are coming from companies large and small and even from inventors who have worked hard on their ideas from their garage or basement.
I’d lump their activities into two categories: those who are trying to disrupt traditional commercial models – in areas like communications, remote sensing, navigation, and others, and those who are trying to create wholly new capabilities in robotics, propulsion, additive manufacturing, satellite servicing, and others. These capabilities will open up whole new horizons of space exploration and space commerce.
In my own career, I have seen incredible advancements in commercial remote sensing. Our entire planet is now imaged at least one every day, and there are significant developments in using remote sensing data to add value in market verticals like mapping, agriculture, insurance, and many others. This is deepening our understanding of our world and presenting new scientific and commercial possibilities.
We can talk about other areas, like satellite servicing: earlier this year, Northrop Grumman successfully completed the first commercial docking of their Mission Extension Vehicle, returning an aging Intelsat 901 satellite back to commercial service. This is a significant advancement in satellite servicing, but also portends near-term possibilities for refueling and repair of satellites, as well as the emerging area of active debris removal.
Slightly farther off, space resource exploration. Some have said that the world’s first trillionaire will make their money from the extraction and utilization of space resources. Countries such as Luxembourg and the U.S. are looking at the issue of property rights in space to facilitate scientific and commercial opportunities in this area. The President recently signed an Executive Order on Encouraging International Support for the Recovery and Use of Space Resources.
However, we do understand that technological innovation is not always a smooth road. The space market is becoming a normal market. There will be successes, failures, mergers, and other normal market behaviors. Success will not come overnight, and it will not come to everyone.
There will also be unforeseen economic realities that impact the advancement of the space industry. We find ourselves in the middle of one of those unforeseen situations at the moment.
This does not spell disaster for the commercial space industry. Instead economic uncertainty can drive new business and technological efficiencies that propel the industry forward. We believe this will be the case.
The second thing that is needed are regulatory environments that encourage these entrepreneurs. In the United States, our Space Policy Directive – 2 encourages government agencies to pursue activities to streamline regulations for commercial use of space. The Department of Commerce recently published a new rule on commercial remote sensing that marks a significant departure from previous policies on remote sensing licensing and regulation.
The rule has been released publicly in the U.S. Federal Register and emphasizes regulatory transparency and limited restrictions. It is a reflection of advancements in the global remote sensing market and is designed to allow companies to innovate and bring services to market at speed.
While regulation is often thought of as a purely government function, regular dialogue with industry is necessary and important. Industry can help government understand the kinds of capabilities that are coming to market and their applications. They can also identify areas where regulations impede innovation and commercial activities.
The third thing that is needed is a robust finance and insurance ecosystem. Both of these communities have become more sophisticated partners for the space community, providing needed investment and a shifting of risk. Prior to recent events, the last several years have seen a steady increase in financial support to the commercial space industry.
Venture capital invested $5.7B in 178 commercial startups worldwide last year, making 2019 the biggest year for private space investments, according to Space Angels. Another company, Bryce Space and Technology, assesses that over $18B has been invested in the commercial space industry, mostly in startups, since 2000. The vast majority of that funding has come since 2012.
Some space startups may need a broader portfolio of investments, given the long and costly timelines for some space technology developments. Involving the larger, traditional financial institutions will be essential to sustaining longer-term development timelines for certain space technologies.
Space insurance will also be a critical enabler of the commercial space industry. As our understanding of the space environment deepens, and our experiences with new space concepts and business models matures, the insurance industry will be a necessary partner to encourage investment and reduce commercial risk.
Fourth, we need to inspire and attract a wide and diverse range of talent to the space industry. This is so important. If the space industry is going to reach its multi-trillion dollar potential, it will need all types of skills beyond the necessary technical expertise.
That will include business case developers, intellectual property specialists, marketing and media developers, artists, and many others will play important roles in the industry. If we only think about the technical dimensions of space, it will not achieve its commercial potential.
While the space workforce is growing, it is not growing fast enough. Space Angels, a space investment platform, recently launched a space jobs website, called SpaceTalent.org, connecting students and prospective employees with space companies seeking talent.
Last year, our Minority Business Development Agency within the Department of Commerce awarded its first ever space commerce grant to the Space Foundation to support the inclusion of minorities in the space industry. We are planning to host an event in the near future celebrating the role and importance of women in the space industry, in the hopes of attracting more.
Diversification in the space industry will be key to realizing new technology and business insights, and to broadening the space workforce.
Fifth, is that we have to improve our understanding of the true economic impact of space activities here on earth. The space business is changing so rapidly that we can do a better job accounting for it in order to inform investors – including national and local governments – and entrepreneurs about the space economy.
I was delighted to have an exchange last year with your Bocconi Institute at George Washington University on this important topic.
Within the Commerce Department, we have turned to our sister agency the Bureau of Economic Analysis to begin the rigorous research on how to do this. And that has attracted the interest of a number of other economic statistics organizations, themselves interested in understanding the economic impact of space. This is one area where we see opportunities for cooperation with our international partners.
Reaching our ambitious space exploration and space commerce will require cooperation and collaboration, between governments, between governments and commercial entities, and between space companies. To this end, we are currently planning the second Space Enterprise Summit with our colleagues at the State Department for later this year.
Commercial partnerships will drive new space mission areas and help create new efficiencies in the space business. Public-private partnerships will drive innovation by unleashing commercial innovation backed by government funding and other support. They will allow technologies to come to market earlier, and provide benefits to both commercial and government operators.
Government-to-government partnerships will also be critical to achieve common goals and objectives in space. The expansion of human exploration is one such area. NASA recently released the Artemis Accords as part of our plans to return to the Moon, sustainably, including international and commercial cooperation.
Space safety and sustainability is another key area where international partnerships will provide long-term benefits for all spacefaring nations. This is the last topic I’d like to mention before turning to questions. Safeguarding our future in space for exploration and space commerce is a paramount concern.
Improved space safety, and improved understanding of the space environment, affects every space operator, and will determine the future of the space industry, and the future of all spacefaring nations.
For commercial space operators, space debris, and space safety in general, is an economic concern. It impacts the ability to safely design and operate spacecraft, deliver commercial services, obtain funding and insurance, and drive revenue and profit.
Space debris is perhaps the largest unknown when it comes to space operations. It reduces certainty and increases risk.
Our Space Policy Directive-3 charged the Department of Commerce, and specifically the Office of Space Commerce, with establishing a system for civil and commercial space situational awareness and space traffic management.
Currently, this mission is handled by the US Air Force. To allow them to focus on the security elements of space, and in recognition of the increasingly commercial nature of space, the private sector and international conjunction notifications will transition to the Department of Commerce by 2024.
Currently, we are working to establish an open data repository that will ingest diverse space data sets and allow us to apply rigorous analysis and visualization techniques to create an improved space safety product for commercial operators around the world.
Our data repository will be based on the Department of Defense’s unclassified authoritative catalogue of space objects, augmented by commercial, civil, and international space situational awareness data.
We welcome international participation here by all of our partners and other like-minded nations. We met earlier this week with the EU and participants in the European Space Surveillance and Tracking Framework, including Italy, to discuss developments in this key area. Space safety and space sustainability are key issues for all of us, and the more expertise that we can collectively apply to the problem of space debris, the better.
I imagine I speak for all of us when I say that a solution to mitigate the problem of space debris cannot come soon enough.
The crisis has helped highlight the value of space, and the positive impact it has had on our lives. Thank you again to the Italian Space Agency, and the U.S. Government representatives in Italy for bringing us all together today.
I look forward to your questions.