Study quantifies costs of EU Space Act to European and U.S. companies

WASHINGTON — A proposed European Union space law could cost both European and American space companies hundreds of millions of euros in lost revenue annually, according to a new study.

The Progressive Policy Institute last week released a study it commissioned from London-based European Economics on the impacts of the proposed EU Space Act. The European Commission published a draft of the act in June and is currently reviewing public comments.

The act is intended to create a single market for space products and services among EU member states, replacing a patchwork of national regulations. It would also impose new space safety and sustainability requirements on European companies and non-European firms seeking to do business in the EU.

The economic analysis relied on the European Commission’s own estimates of increased compliance costs. The commission projected that the act would increase the cost of manufacturing a satellite in Europe by 2% and a launch vehicle by 1%.

The study assumed companies would pass those costs on to customers through average price increases of 2.7%. Depending on price elasticity in each market segment, that could reduce demand by 1% to 13.6%. The resulting loss to European companies would be 245 million euros ($285 million) in annual revenue and 100 million euros in profits, the study concluded.

U.S. companies exporting to the EU would also be affected. The study estimates that American firms would lose 85 million euros in annual revenue and 7 million euros in profits from reduced European sales.

The act could make European space companies less attractive to investors, the study warned. The increased costs could reduce investment in the short term by nearly 700 million euros, rising to 3.45 billion euros over the long term. U.S. firms would see much smaller investment hits: 11 million euros in the short term and 50 million euros over the long term.

Chinese companies would be virtually unaffected, the study found, because they conduct little space-related business in Europe. It identified just 11 million euros in annual Chinese exports to the EU in the sector, mostly in ground systems and services, about 1% of U.S. exports.

PPI, though, warned that the act, as drafted, would disadvantage European and U.S. companies while benefiting China.

“This approach harms both sides of the transatlantic partnership just as China is successfully moving toward dominance in space, which has far-reaching implications for broad swaths of modern society,” Mary Guenther, head of space policy at PPI, said in a statement. “The EU Space Act burdens Europe’s own companies, hits American firms too, and leaves China with a free pass. That is not a formula for competitiveness or security.”

She urged the European Commission to “go back to the drawing board to develop an approach that strengthens European innovation and competitiveness while preserving cooperation with allies.”

Many U.S. companies and organizations have criticized the proposed act for the burdens it would impose on operators seeking access to the European market. The U.S. State Department also criticized the legislation in a formal comment period that closed last month.

“As a general matter, the United States expresses deep concern regarding measures in the proposed act that would impose unacceptable regulatory burdens on U.S. providers of space services to European customers,” the State Department wrote.

The European Commission is reviewing comments and preparing a second draft of the legislation that could be released before the end of the year, Rodolphe Muñoz, team leader for space situational awareness and space traffic management at the commission, said at Space Tech Expo Europe last month.

A revised draft would position the act for an initial vote by the European Parliament next summer, said Christophe Grudler, a French member of parliament, at the conference. Final adoption would not come before 2027, beginning a transition period that would run through the end of the decade before the rules take full effect.