An Inflection Point for Canada’s Space Sector

This past June, the top science advisors of the governments of Canada, Australia, New Zealand, the United Kingdom and the United States met to discuss the impact that investment in science and technology (S&T) has had on the world and how continued investment could affect the future. They discussed not only the S&T hot-button issues of the day, such as artificial intelligence and climate change but also the structures which underlie the dissemination of know-how throughout the economy. Not surprisingly, the group was bullish about the ability of S&T to “unlock new solutions to complex challenges” but cautioned that “how the future unfolds depends on our deeply human choices.” 

As we look towards the future from a present where the whims of individual powerful actors loom large, the role of those human choices about where we choose to invest in R&D and the structures that allocate and distribute those resources matter more than ever. 

State of the Canadian Space Sector

The space ecosystem provides an example of lessons learned for other sectors to consider. On the whole, the space sector features close partnerships between government, academia and industry arising from the traditional role each of these actors has played. Until relatively recently, activities in space were initiated and funded by the government. Companies provided the production capacity with university researchers focused on developing the fundamental science cases on which space missions are based. Science-driven space missions have the advantage of being compelling and difficult, and science communities are motivated and creative. Making great strides in scientific discovery requires pushing the technological envelope—the Webb Space Telescope is an extraordinary example of this principle in action.

The relationship between innovation and institution is illustrated by a well-established scale within the engineering of space projects known as “Technology Readiness Level” or TRL. TRL tells you where a space technology can be found along its development timeline in a quantitative way. Technologies assessed as TRLs 1, 2 and 3 are early-stage ideas being tested in the lab, the domain of the academic space sector. TRLs 7, 8 and 9 describe mature technologies being flown in space, the bailiwick of the industrial space sector. Though the government invests at all levels, TRLs 4, 5 and 6 are where its support is most keenly felt. This is where space agencies place bets, based on the public interest, as to which ideas are most likely to succeed in being matured into useful products. In this way, the three main types of players in the space sector have a symbiotic relationship—the economic benefit realized at the highest levels cannot occur without the creativity, risk, and effort invested at earlier stages.  

Advancing Canada’s Space Economy

Not all technologies are ultimately successful, but even with these failures, the return on investment in the space sector is notably high. The Canadian Space Agency, in their State of the Canadian Space Sector Report 2023, presents an analysis that $3.0 in follow-on revenues are generated from each dollar invested in government space development programs within 5 years.

This system has benefits, especially for industry. The long timelines of space missions mean sustainable funding that outlives any one administration or quarterly set of earnings reports. That means that space products often do more to serve the public good than those produced in other industries. Furthermore, the government takes on the bulk of the risk. This scheme is a hallmark of the nurturing of a developing industry. In particular, the history of the space sector is often compared to the early history of aviation in which government incentives, particularly via the postal service, were provided to encourage private industry to develop. The integration of the academic sector in the development process also provides a pipeline of talent.  Students participating in small satellite projects with science payloads already have valuable mission experience when they start looking for jobs.

There are good reasons for this structure. Space projects are typically very complex and, up until recently, very expensive. Furthermore, the long lead times in developing new innovations—typically measured in years for space projects—mean that the sector is more forward-looking and risk-averse by design than other parts of the economy. While this can make development slow, it has led to fantastically reliable space missions. For example, the Canadian atmospheric science mission SciSat—launched in 2003—is still returning essential information for understanding the chemistry of the atmosphere and monitoring ozone-destroying molecules at a very low cost. 

However, the space sector is changing as more work is being conducted progressively within the private sphere and as the overall size of the sector grows. It was recognized early on in spaceflight that telecommunications could be profitable despite the huge up-front costs of getting to space. Yet, it wasn’t until 1988 that the first privately owned telecommunications satellite, PAS-1, was flown. In the years since, more and more activities in space have become the realm of private actors, with even privately crewed spaceflights now a reality for those with the funds to pay for them. 

Meanwhile, overall investment has increased tremendously. The size of the Canadian space sector is $5.0 billion as of 2022, of which $593 million is for R&D. It is expected to grow to approximately $40 billion by 2040, according to a 2024 Deloitte report commissioned by Space Canada, an industry advocacy group. This progressive development is changing the way that different actors within the space ecosystem interact. For instance, universities can now directly be contracted to fly instruments with private companies. Meanwhile, even large government funders are looking to pull back on how much project supervision they provide in-house. Notably, the US National Oceanic and Atmospheric Administration has said that for their space needs, they now buy what they can and build only what they must.

This gradual transfer of capability from the public to the private sector has also seen tumbling prices for access to space. US-based rockets, which were the workhorses of launches in the 1990s like the Atlas, Titan, and Delta rockets, typically required between $20,000 and $40,000 per kg of payload to access low Earth orbit, the closest stable orbital region above the Earth. Today, the Falcon series of SpaceX rockets can do the same job for between $1500 and $2600 per kg.  This cost revolution has opened up space to a much wider range of actors than ever before. Space has always been a magnet for highly trained workers, but now space entrepreneurship has exploded with mobile, bright minds sensing a place to make a difference and a profit. These people are attracted to countries that are willing to help empower their dreams.

The Future of Canada’s Space Sector 

However, this new state of affairs is not without challenges. As launch cadence has increased, there are concerns about the environmental sustainability of these launches and all the material which must eventually de-orbit, some of it uncontrollably dangerous and much of it toxic. Often, newer satellites are not built to last. Worse, so much high-speed material in orbit creates a traffic control nightmare. As a worst case, a collision could create enough debris to start a chain reaction called the “Kessler Syndrome,” which could destroy everything in orbit and deny humans access to space altogether.

As a result, the space sector is at a bit of an inflection point. We can try to keep the elements of space that led to the success of the sector over the past sixty-six —careful planning that relies on expertise, long outlooks, and transparency. We can even export these innovations to other industries. Or we can do the opposite and make space disposable and short-sighted—just like every other sector of the economy. The choice is ours.