The civil space ecosystem and defence in space

Author

Timo Stellpflug

Partner

Hamburg

Europe's civil space landscape

Europe's civil space sector is in a period of intense evolution, balancing traditional reliance on public entities like the European Space Agency (ESA) and national agencies with the rise of a dynamic commercial industry.

Public-private synergy

ESA and the European Union are actively fostering this new ecosystem through initiatives like the CASSINI programme, which provides funding and business support to space startups. This is a deliberate effort to create a more agile and competitive market, moving away from a solely institutional-driven approach.

Key programmes and infrastructure

Europe's flagship space programmes — Copernicus (Earth observation) and Galileo (satellite navigation) — remain central to its strategy, as outlined by the European Union Agency for the Space Programme (EUSPA). These programmes not only provide critical data and services but also serve as a foundational anchor for the downstream market, where companies develop applications and services based on space-derived data. The EU's new secure satellite communication system, IRIS² (Infrastructure for Resilience, Interconnectivity and Security by Satellite), is another major investment aimed at ensuring Europe's digital and strategic autonomy.

Challenges and fragmentation

A key challenge is the historically fragmented regulatory landscape, with different national approaches. increasing costs and complexity for businesses. To address this in the EU, the European Commission has proposed the EU Space Act, a legislative initiative to create a harmonised framework for space activities, making it easier for companies to operate across borders and promoting a single market for space services. The European space industry is also pushing for a larger and more predictable budget under the next Multiannual Financial Framework to secure the continuity of its flagship programmes and ensure long-term competitiveness.

Defence in space: military applications and use cases

Space is no longer just a domain for scientific exploration; it's a critical and contested theatre of operations for military and defence applications. The shift from a benign to a congested, competitive, and potentially hostile environment is a central driver of strategic space policy globally. The military's reliance on space assets is multifaceted and essential for modern warfare.

Intelligence, surveillance, and reconnaissance (ISR): satellites are a primary tool for collecting intelligence, monitoring troop movements, and mapping terrain. High-resolution imagery and signals intelligence provide a critical advantage in situational awareness.
Global navigation and timing: systems like the USA's GPS, Russia's GLONASS, China's BeiDou, and Europe's Galileo are vital for navigation of military assets, guiding precision munitions, and synchronising communications. Any disruption to these systems would have severe military consequences.
Secure communications: satellites provide a secure and global network for command and control, allowing for real-time communication between units and headquarters, especially in remote or denied areas.
Missile early warning: early warning satellites can detect and track the launch of ballistic missiles, providing precious minutes to mount a response.
Space domain awareness (SDA): this is the ability to track, identify, and characterise objects in orbit. It's crucial for protecting a nation's own satellite from accidental collisions or intentional attacks.

The European and global space outlook

Geopolitical tensions and the increasing weaponisation of space have prompted a fundamental reassessment of defence strategy in Europe and worldwide.

Europe's strategic shift

The EU and NATO have recognised space as a critical domain for security and defence. The EU Space Strategy for Security and Defence aims to increase the resilience and protection of European space systems, develop a common understanding of threats, and maximise the use of space for military purposes. This includes launching pilot programmes for space domain awareness and new Earth observation services tailored for defence needs. European defence spending is at a record high, with significant increases in research and development, a clear indicator of the new strategic focus.

NATO's role

NATO's space policy has evolved to recognise space as an operational domain, alongside land, air, sea, and cyber space, as detailed in NATO's space domain initiatives. The alliance's members are working to enhance space cooperation and interoperability to counter threats and ensure the security of their space assets. The establishment of dedicated space commands and centres, such as the NATO Space Centre at Ramstein Air Base, reflects this commitment.

Global developments

The United States, China, and Russia remain the dominant players, heavily investing in counter-space capabilities, including anti-satellite (ASAT) weapons and jamming technologies. The creation of the U.S. Space Force and the significant budget increases for space defence programmes highlight the USA's focus on maintaining its technological edge and deterring adversaries. Meanwhile, China and Russia are rapidly advancing their own military space programmes, leading to a new kind of arms race.

Short-term (2025-2027) outlook

The next few years will be defined by an acceleration of existing trends, with a strong emphasis on addressing key vulnerabilities and seizing new commercial opportunities.

Civil sector outlook

Launchers and SmallSats: Europe's long-standing reliance on its Ariane and Vega launch vehicles will be complemented by the maturation of a new generation of micro-launcher startups, such as Isar Aerospace and Rocket Factory Augsburg. These companies aim to provide more flexible and cost-effective access to space, directly competing with global players like SpaceX and Rocket Lab. This will be a critical period for these startups to prove their reliability and secure a viable market share.
Constellation deployment: the short term will see the continued deployment of large satellite constellations, both for communication (like Starlink) and Earth observation. Europe's IRIS² system is expected to begin its initial operational capability, providing secure connectivity for government and defence users.
Regulation and governance: the proposed EU Space Act will likely move through the legislative process, and its implementation will be a major focus. It's an essential step toward a more unified EU space policy, but its success will depend on effective coordination among Member States.
Funding and investment: while private investment has slowed slightly from its peak, capital will continue to flow into promising ventures, particularly those focused on downstream applications, in-orbit servicing, and space debris removal. European investment will need to accelerate to keep pace with global rivals.

Defence-in-space outlook

Hardening and resilience: nations will prioritise making their space assets more resilient to attacks. This includes building more satellites with redundant systems, dispersing assets across multiple orbits, and developing capabilities to rapidly replace damaged or destroyed satellites.
Space domain awareness (SDA) tools: the development and deployment of advanced SDA systems will be a key focus. This includes ground-based radars, telescopes, and in-orbit sensors to track threats and maintain a real-time picture of the orbital environment. Europe, in particular, will expand its Space Surveillance and Tracking (SST) capabilities to protect its critical assets like Galileo and Copernicus.
Cyber security: as space systems become more interconnected, they become more vulnerable to cyber attacks. The short-term outlook will see a significant increase in cyber security measures for ground stations, satellite networks, and data links. See here for more.

Mid-term (2028-2035) outlook

The mid-term will likely see the full realisation of current strategic shifts, with significant technological and geopolitical implications.

Civil sector outlook

Maturation of the new space economy: the 'New Space' startups that survive the short-term competition will mature into established players, fundamentally altering the market structure. This will drive down costs, increase launch frequency, and create new business models.
Lunar and deep space exploration: while currently dominated by government-led missions like NASA's Artemis, the mid-term will see a major increase in commercial activities on and around the Moon. This includes lunar landers, resource exploration, and in-situ resource utilisation (ISRU) for missions beyond Earth orbit. Europe's role in this will be defined by its partnerships with the US and its own technological contributions.
In-orbit services and debris removal: as orbits become more crowded, the need for in-orbit services will grow exponentially. This includes satellite refuelling, repair, life extension, and the active removal of space debris. Companies like ClearSpace (Switzerland), which is leading an ESA-funded debris removal mission, will pave the way for a new, economically viable industry focused on sustainable space operations.
Space-based manufacturing: the mid-term could see the beginning of small-scale manufacturing in space, leveraging the unique microgravity environment to produce specialised materials, optics, or components.

Defence-in-space outlook

Integration and fusion: military forces will increasingly integrate space-based data and services into all aspects of their operations. This will move beyond simple communication and navigation to using space assets for dynamic targeting, real-time battle damage assessment, and enhanced command and control.
Counter-space capabilities: the development of counter-space technologies - both kinetic (ASAT missiles) and non-kinetic (lasers, jammers, cyber tools) - will continue to be a top priority for major military powers. This will create a complex strategic environment where a nation's ability to deny an adversary's access to space could be a decisive factor in a conflict.
International cooperation and competition: the mid-term will be a delicate dance between cooperation and competition. While nations will collaborate on establishing norms of behaviour to prevent a conflict in space, the strategic importance of space will also drive a constant push for technological superiority, potentially leading to a new, more dangerous phase of the space race. This will force Europe to solidify its position as a cohesive and capable space power, independent of other global actors.