Low Earth orbit economy could add €1 trillion by 2040

Encompassing a wide range of space-related business, the low Earth orbit (LEO) economy could contribute about €1 trillion to the global economy by 2040. European participation in this sector is strategically important, as the continent attempts to reduce dependencies and prove its technological readiness.

The LEO economy will be a catalyzing force in a number of industries, for example when it comes to manufacturing in microgravity or use cases related to the pharmaceutical industry, estimated to be worth about €30 billion alone.

That is the takeaway from a report by Roland Berger and LEOconomy, which highlights the importance of the LEO economy and how it will likely drive future technology in areas like telecommunications, energy, environment, agriculture, and logistics, among others.

An LEO is an orbit that is relatively close to Earth’s surface – normally not further out than about 1,000 kilometers. The International Space Station (ISS), for context, orbits earth within this range at an altitude of about 400 kilometers.

The space economy

The cost of transporting payloads to and from space has reduced by 90% per kilogram since heavy reusable rockets, like some of the models made by SpaceX, began to revolutionize space flight. As the cost barrier lessens, the doors are being opened to huge potential for the LEO economy.

“As space technologies integrate with Earth’s industries, they are starting to create tangible business opportunities that every forward-thinking organization can capitalize on,” said Manfred Hader, senior partner in Aerospace & Defense at Roland Berger.

In the near-term future we could begin to see in-orbit logistical hubs that support space manufacturing, for example. These could be increasingly useful as there is likely to be more and more research and exploration activity in space.

Indeed, in-space manufacturing is one major trend when it comes to the space economy. Manufacturing in microgravity is likely to be huge in a number of areas, like high-purity fiber optics, high-quality semiconductor crystals, and superior pharmaceuticals made with certain types of crystallized proteins that cannot be produced on Earth.

But it goes beyond just space-related industries. Traditional industries are also increasingly recognizing the potential of the LEO economy. The low Earth orbital zone offers a number of key advantages, like minimal latency for data transmission, making it ideal for some applications that require fast data exchange.

Advanced robotics and autonomous systems developed for space missions in LEO, such as in-space assembly, can be adapted for use on Earth. This would create new solutions and products in a few other industries too, including construction and mining.

Can Europe step up to the challenge?

To be sure, Europe is behind the US, Russia, and China when it comes to space technologies – but it is still a formidable player. The European Space Agency (ESA), a member of the team of agencies that built and operates the ISS, is one of the world’s top five space agencies, with participation from 23 EU member states.

However, in order to unlock the full potential of LEO economy opportunities, European governments need to offer more support. Publically-funded programs could help support the development of innovative technologies like reusable launch vehicles and in-orbit manufacturing capabilities.

As geopolitical tensions rise and economic uncertainty continues to hinder growth, Europe could look to new space industries as a way to gain strategic advantage. Europe is still too dependent on the US when it comes to innovative technologies, and an increasingly bitter rivalry with China and Russia is likely to increase global competition.

“Europe must take an active and leading position in the low Earth orbit economy – developing it is crucial for our continent’s economic growth, technology innovation, climate protection and strategic independence,” said Matthias Spott, founder and CEO of LEOconomy.

A big part of boosting the LEO economy will be in the hands of the ESA and regulators. International collaboration will be important for establishing standards and innovating. Europe has a distinct advantage here: Its space program is already international by default and EU countries work together to a very high degree when it comes to science and tech.

Among the hundreds of EU programs for development funding, there are several that specifically fund research or seek to boost investment in the space sector. Horizon Europe, for example, is a €93.5 billion EU fund aimed at a wide range of programs, including space research.

“The space economy is much bigger than the space industry. That is why one of the key tasks is to raise awareness among the various stakeholders and decision-makers, especially those outside of the space industry, and communicate the potential. This calls for extensive cooperation to unlock innovative ideas and associated resources,” said Spott.