How a small state is outshining the German Federal Government – Liechtenstein’s new space law

In July of this year, the government of Liechtenstein, the sixth smallest state on earth, adopted a statement on the enactment of a space law, which is due to come into force on 1 January 2024. In doing so, Liechtenstein is keeping in step with the USA, Russia, the UK, France, Ukraine, Australia, Japan, Belgium, the Netherlands, Austria and Luxembourg, all of which have already enacted space legislation. The Liechtenstein Space Act, like most other national space laws, provides in particular for regulations on the authorisation and registration of space activities and on liability in the event of damage. 

The background to this is said to be a private satellite project with a Chinese company, which aims to provide broadband internet by placing around 600 satellites with Liechtenstein frequencies into orbit around the earth. Liechtenstein has recognised the crucial importance of a national space law for the space industry and is now a contender in the international race for the commercial use of space. After Germany presented its long overdue new Space Strategy at the end of September 2023, visible government efforts to swiftly enact a German space law have been limited to declarations of intent, even though this is essential for the promotion of existing commercial space companies in Germany.      

Urgently needed: Waiting for Germany’s space law

“Space travel and the NewSpace sector are key technologies of the future. We are strengthening the national space programme and the European Space Agency (ESA) and preserving their independence. We are developing a new space strategy, taking into account the avoidance and recovery of space debris. We are strengthening Germany as a centre of aerospace production. We are supporting research into and the market ramp-up of synthetic fuels that enable climate-neutral flying. The procurement procedures in connection with the aerospace research programme for the development and use of digital tools, process development, materials research and lightweight construction are to be further accelerated and advance payments made possible. We are strengthening research into the use of sustainable fuels, quieter propulsion systems and a platform for simulating and optimising the entire aviation system in terms of its impact on the climate.”¹

Germany’s new Space Strategy and the planned Space Act

This section on aerospace from the Coalition Agreement between the SPD, Bündnis 90 / Die Grünen and FDP from December 2021 is the only reference dedicated to the topic of aerospace in the 178-page document. Despite all the criticism, a “new Space Strategy” was announced, which the Federal Government then adopted in September 2023.  This means that around 13 years have ultimately passed since the Federal Government’s old space strategy came into force in November 2010. This former space strategy, which has basically remained unchanged for 13 years and which formed the basis for German space activities, required a comprehensive adaptation to the economic, (geo)political and socially changed framework conditions, not least against the background of the immense importance that the increasingly private sector-initiated space programmes have gained for mobile telephone networks, navigation systems, satellite data-based applications, air traffic, intelligent networks, banking and much more. In this respect, the new Space Strategy shows that the Federal Government has recognised the extraordinary and rapidly increasing importance of space as a key industry and its commercialisation. With regard to the corresponding comprehensive adjustments to the fundamentally changed framework conditions, the new national Space Strategy primarily pays lip service; it is difficult to pinpoint concrete initiatives to ensure planning security.  With regard to the handful of specific projects that the German Government has promised, it should be noted that the imminent reduction in the national space budget calls into question their timely implementation (see Insight new Space Strategy). In particular, there are still no commitments to the German Space Act officially announced in the new Space Strategy. Apart from the official announcement, the Space Strategy does not provide any concrete content or a possible date of enactment for such a German Space Act. Without such national legislation, the 1967 United Nations Outer Space Treaty (Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies) applies, which in particular establishes a liability regime that makes it almost impossible for market players to pursue their business models in Germany from a risk perspective.

The area of NewSpace 

While the Space Strategy can set the course for future activities of German companies, not least in terms of the Coalition Agreement, the creation of a national space act is essential, especially for the area of NewSpace - a “central future technology” explicitly mentioned in the Coalition Agreement and the new Space Strategy. 

The term NewSpace describes the ongoing commercialisation of space travel and its increasing integration with the non-space economy, which is being driven by private players in particular. Although space agencies are still the largest clients, start-ups are increasingly developing new business models for applications in space and are entering into direct competition with established companies. The development of small satellites and their launchers (so-called “micro-launchers”) is a key topic of the NewSpace age. Small satellites in low orbits will be the key to future technologies such as autonomous driving and the Internet of Things. They are transported into space either individually or via a ride-share programme using micro-launchers. In Würzburg, the research institute Centre for Telematics (ZfT) is working on the fully automated, series production of small satellites. To date, US American Elon Musk’s space company Space-X, for example, has deployed more than 1,800 small satellites in low earth orbits, which are intended to contribute to better internet coverage.² The first commercial European microsatellite ESAIL, whose core components were produced in Germany, was launched on 3 September 2020 with an Italian launch vehicle from the European spaceport in Kourou, French Guyana.³
The three German space companies Rocket Factory Augsburg, Hyimpulse and Isar Aerospace are in a neck-and-neck race to offer the first low-cost, commercial space transport services for small satellites using micro-launchers.⁴ The German Offshore Spaceport Alliance (GOSA) consortium is researching a floating launch platform in the North Sea to launch micro-launchers from a special ship; the first launch is planned for the first quarter of 2024.

As a key industry, space travel is of great strategic importance. Research, climate protection, communication and security are key areas of activity in the space sector, while private investment, innovation and progress in Germany can provide new impetus. Germany invests 0.05% of its gross domestic product in space activities (as of 2020), putting it well behind the USA, for example, which is the largest investor in space with 0.22%. In 2020, the Federation of German Industries (BDI) outlined the opportunities for German industry in an article about a German micro-launcher launch site: “According to current estimates, the entire global space market will grow more than sevenfold from USD 360 billion (2018) to up to USD 2,700 billion by 2040”.⁵ The NewSpace sector is also becoming increasingly interesting for investors. According to a study by the BDI, the industry raised around 308 million euros in capital in 2020, almost twice as much as in the previous year. The New Space sector is also considered an enabler for other business areas and technologies: around three quarters of the New Space companies analysed in the BDI study generate business with customers who previously had no connection to space.

Creation of a reliable legal framework

In order to effectively advance the commercialisation of space travel including the NewSpace sector, private market players need a clear and reliable legal framework in the form of a national space law, in order to be able to make investment decisions. In particular, international and national liability rules, regulations regarding planning procedures for runways/launch pads, for example, and the clarification of ownership (raw materials) in space are crucial for investors and companies. The urgency of creating a separate, national space law arises from the inadequate regulations in this regard in the current United Nations (UN) Outer Space Treaty. 
In France, for example, there is an upper liability limit of EUR 60 million, up to which the responsible company is liable for damage caused by rockets or satellites on Earth. In Germany, as long as there is no national space liability regime, the state is fully liable for accidents and damage on Earth in accordance with the UN Outer Space Treaty, without recourse to the company responsible. There are currently around 5,465 satellites in space (as of 2022),⁶ of which at least 1,800 are in low Earth orbits. In view of this narrowing area in space and the increasingly diversified players, the absence of a national liability regime is a critical liability gap that restricts investment. 

Planning procedures for the construction of runways or launch pads for satellites also have no legal basis without a national law. Authorisations can therefore only be granted on a case-by-case basis. The bureaucratic effort involved in these individual authorisations makes Germany less attractive as a location for rocket launches, for example, compared to other countries with corresponding legislation. In this respect, the absence of a space law also inhibits investment in Germany as a space location. 
With regard to the question of ownership and utilisation of raw materials in space, countries such as Luxembourg, Japan and the USA have stipulated in their national space laws that rare-earth elements, metals and raw materials belong to the country that mines them. Although space mining itself is a legal grey area, experts believe that billions of euros worth of raw materials, which are important for many key technologies, can be found in celestial bodies. A German space law or at least the introduction of international regulations in this area could also secure Germany a place in a potential space raw materials market.

Outlook

In the past, almost monopolistic market conditions, particularly in Western countries, led to high prices for rocket and satellite systems as well as for payloads and were only broken up by the transition to NewSpace. Legal certainty and unbureaucratic planning procedures are now the key to the further successful economic development of the NewSpace sector in Germany. The general prospects for this on the business side are good, as are Germany’s prospects in the field of small satellites and their transport into space. The innovative start-ups that have settled in Germany and are already conducting successful research into small satellites and their micro-launchers are internationally competitive. They are all counting on the prompt implementation of the Federal Government’s new Space Strategy and the prompt enactment of the corresponding national law that will enable them to carry out rocket launches in Germany and create legal certainty for the construction and planning of launch sites. 
The German Government is once again called upon to follow the example of the small state of Liechtenstein and not to refer the new space players to the sweeping, financially hardly realisable commitments in the new Space Strategy. The task of the Government in order to provide space players with considerable support in international competition and to make Germany an attractive space location for companies and investors is to enact the long-awaited national space law.

¹ See page 28 of the Coalition Agreement 2021 - 2025 between the Social Democratic Party of Germany (SPD), Alliance 90/The Greens and the Free Democrats (FDP) “Mehr Fortschritt wagen Bündnis für Freiheit, Gerechtigkeit und Nachhaltigkeit” (available from all three coalition partners: SPD, BÜNDNIS 90 / DIE GRÜNEN, FDP).

² Cf. SZ, 9 February 2022, Solar storm causes 40 Space-X satellites to crash.

³ Cf. DLR, 3 September 2020, Microsatellite ESAIL launches into space with new satellite platform.

⁴ Cf. SZ, 2 February 2021, Race into space.

⁵ See, MM 2 February 2021, Which start-ups are involved in the German "race to space".

⁶ Source: Statista 30 April 2022, number of satellites in space by country.