Federal tax incentives and financing for the reusable launch vehicle

Financing a very large new space transportation system is a major venture. It requires an initial investment of many billions of dollars and will be expected to perform successfully during its lifetime of at least twenty-five years. In the past, space systems of this magnitude have been funded, owned and operated by the government. Today, as the responsibility for opening and maintaining space systems is expected to shift from government to industry leadership, the reusable launch vehicle (RLV) presents the private sector with the challenge of finding ways of financing and building a system that will prove to be a successful private venture. The government, recognizing that it is a major customer of the RLV and that new technology must be developed for the RLV to work and to adequately reduce the cost of access to space, will fund some Initial technology development as well as provide some incentives for a private operator. This paper shows that using the current tax system's corporate investment benefits, coupled with a favorable debt financing arrangement, a profitable privately owned RLV system Is within the realm of possibility.     

Commercial spaceports — a window of opportunity?

The feasibility of building commercial spaceports is being actively investigated in several countries. Potential benefits include boosting economic development and assisting the commercial launch industry. This report finds, however, that commercial spaceport development will probably not be capable of generating a large enough return on investment to attract private sector involvement without significant government assistance. It is also unlikely that the market for large launch vehicles will support spaceport development; however, small satellites may offer better prospects.     

Developing new launch vehicle technology: The case for multi-national private sector cooperation

Space is now a global business, yet the cost of getting to space is still high. Developing new launch vehicles that are cheaper, safer, and more reliable is the key to both rapid commercial growth and to more and better government uses of space. However, the R&D process leading to new launch vehicles is expensive and technically challenging; the past 50 years have seen many government development programs, but no major technological breakthroughs. Perhaps, it is therefore time to think about other ways of developing new launch vehicles. The best expertise in this field resides primarily with private companies and is spread across many actors and nations. A consortium led by space firms might be a better approach to opening up space in the 21st century. Governments will have to develop new policies treating space as though it were a commercial industry, in particular, relaxing export trade restrictions wherever possible. Issues of dual-use may be outweighed by the rapidly growing widespread availability of launch capabilities. Since new launch vehicles will require large up-front R&D expenditures, government support will continue to be needed to supplement private capital funds. Contributions to this effort should be international. However, difficult it might be in today's security conscious environment to reorient government policy, doing so may offer the most efficient and successful way to break the technological and economic barriers to more reliable access to space.     

No future for starship free enterprise

The author, whos is the British Labour Party's Shadow Secretary of State for Trade and Industry, condemns the failure of the British government to increase its funding of civil space research. He argues that government reliance on private funding for Britain's space programme will fail. Supporters of space research need to point to the long-term and high-risk nature of the commercial return from space but also argue that space research contributes in a general way to the advance of humankind.     

Rethinking public–private space travel

On May 24, 2012 SpaceX's Dragon capsule was launched and in doing so became the first commercially built vehicle to berth with and carry cargo to the International Space Station (ISS). It successfully completed its mission and returned to the Pacific Ocean on May 31, 2012.¹ The docking of Dragon represented a historic moment where a commercial enterprise managed to achieve that which had previously only been accomplished by governments. “In the history of spaceflight – only four entities have launched a space capsule into orbit and successfully brought it back to Earth: the United States, Russia, China, and SpaceX”.² While this is a monumental accomplishment for private industry, we cannot ignore the value of public–private partnerships and the role that government played in enabling this incredible achievement.In this paper I will examine how public–private partnerships are enabling the development of the commercial space industry, viewed through the lens of the Rethinking Business Institutional Hybrid Framework put forward by University of Oxford professors Marc Ventresca and Alex Nichols in their Rethinking Business MBA course. I intend to demonstrate that the NASA versus Commercial Space argument is a false dichotomy and that only by working together can both sectors continue to push the boundaries of space travel and exploration. I plan to do this by first discussing how the NASA-SpaceX partnership came about and the reasoning behind it. I will then explore what a public–private partnership (PPP) is, as compared to other government privatization schemes, and explain why Space Act Agreements are significantly different from anything done previously. I will then analyze the impact of these agreements and outline their benefits in order to demonstrate the value they create, especially in areas of mutual value creation and economic development.     

Reorganization of the space development structure in Japan

At the end of 2002 a new law was passed to create a single space agency for Japan out of the merger of NASDA and NAL with ISAS. The new agency will be an independent administrative institution with day-to-day autonomy from the government. The authors provide the background to the decision to restructure Japan's space development and describe the goals, organization and scope of activities of the agency. Steps have been taken to counter concerns that consolidating the three existing organizations could hamper the conduct of basic research.     

Administrative reform of Japanese Space Policy Structures in 2012

In Japan, there are several government ministries and agencies with important roles in the development and use of space. In 2012, Japan restructured its administrative organs related to the development and use of space through legal amendments to the original acts that established these organs. Although this was an important administrative reform that took four years of planning and discussion to accomplish, this restructuring has not been communicated well outside of Japan. This study provides the first comprehensive overview of the recent legal changes in Japanese space policy. In contrast to some reports, the Ministry of Education, Culture, Sports, Science and Technology (MEXT) still has primary responsibility for the finances and personnel of the Japan Aerospace Exploration Agency (JAXA). This continues to be true even after the Cabinet Office begins its new role as the focal point for formulating Japanese space policy. It remains to be seen how the policy direction of the Cabinet Office will interact with the operational, financial, and personnel responsibilities of MEXT. I argue that knowledge of the roles of MEXT and the Cabinet Office in space policy, and the tension between the two organizations, is key to understanding Japan's future space policy decision-making process. By tracing the history of Japanese space policy since 2001, I also suggest that if bureaucrats had thought more deeply before making major reforms to space policy and its administration, there would have been less confusion over the development of national space policy this past decade. This paper concludes by identifying some key elements to monitor in the coming years of Japan's space policy.     

Rebuilding US launch capabilities

Attempts to rebuild US commercial launch capabilities through stimulating private industry will be constrained by the fact that free-market competition does not really exist in the space industry. As the worldwide supply of launch vehicles grows, the policy now offered by the US government is only likely to fragment the US space launch vehicle industry. The author argues in favour of a proposal to establish a quasi-governmental corporation for space launches which would both safeguard the interests of government and commercial users and ensure that business acumen was applied.     

Public–private models for lunar development and commerce

Visions about the establishment of a lunar base and development of the Moon for scientific, technical and commercial ends have been on the political agenda since the beginning of the Space Age. In the past few years a number of spacefaring nations, including the USA, European states through ESA, Japan, India, China and Russia have proposed missions directed at the robotic and human exploration and development of the Moon. This paper argues that an important factor in advancing these missions lies in a partnership between the pubic, governmental sector and the private sector. The paper analyzes the dynamics of this partnership as applied to the case of the US Vision for Space Exploration. The results of the analysis suggest that public–private partnerships directed at lunar development and commerce depend on how government reduces risks for the private sector. The risks identified and discussed herein include political and legal risks, technological risks, and financial and market risks.     

The private solution to the space transportation crisis

Confused and short-sighted decisions dominated by political expediency have been made about US space policy in the past 30 years. Overly large and ambitious systems have been chosen, resulting in today's crisis in space transportation. The history of commercial aircraft development offers an alternative example of producing in a range of sizes and capabilities for a wide variety of users, and shows that the space transport industry could benefit from applying the decision-making processes used in private enterprise. The authors examine strategies for privatization of space transportation and conclude that policy support for the commercial launch industry must be continued. NASA must be reoriented towards its basic research function, and more government services should be bought from the private sector.     

Exploration of CASC's Commercial Space

China's commercial space activities started from the launch of Asiasat-1 satellite by a LM-3 launch vehicle on April 7, 1990. As the leading force in China's space industry, CASC has been committed to commercial space for nearly 30 years. The article describes CASC's advantages and activities in commercial space sector, as well as outlook for CASC commercial space development. The author concludes CASC is willing to coordinate and cooperate with state-owned and private companies and will create a new pattern for commercial space, opening up a new industry for space development and achieving more splendid achievement.     

Space activities in Korea—History, current programs and future plans

Korea has participated in space development only since the 1990s. Despite its short history, Korea has been increasing its technological capabilities with the successful experience of several national projects. The Korean government established a long-term space development plan in 1996, which suggests a clear way forward for space development up to 2015. Space activities in Korea will grow continuously. The direction of future space activities will be decided by the national space development plan. This paper discusses Korea's past and present space activities and future development projects.     

The US national space transportation policy: issues for congress

Below is a summary of what was to be the first in a series of reports produced by the Office of Technology Assessment (now defunct) on policy for the USA's future space transportation technology and industrial base. It examines the Clinton Administration's 1994 National Space Transportation Policy and supporting implementation plans and raises and analyses such issues as conflicts and redundancies within NASA and DoD space transportation development programs; competition and cooperation with foreign launch vehicle and component providers; US government limits on the conversion of long-range missiles to space launchers in the face of Russian activity in this area; and the effectiveness of Administration efforts to include the private sector in space transportation decision making. Some issues not covered in the Policy are also discussed.     

NASA spinoffs to bioengineering and medicine

Through the active transfer of technology, the National Aeronautics and Space Administration (NASA) Technology Utilization (TU) Program assists private companies, associations, and government agencies to make effective use of NASA's technological resources to improve U.S. economic competitiveness and to provide societal benefit. Aerospace technology from areas such as digital image processing, space medicine and biology, microelectronics, optics and electrooptics, and ultrasonic imaging have found many secondary applications in medicine. Examples of technology spinoffs are briefly discussed to illustrate the benefits realized through adaptation of aerospace technology to solve health care problems. Successful implementation of new technologies increasingly requires the collaboration of industry, universities, and government, and the TU Program serves as the liaison to establish such collaborations with NASA. NASA technology is an important resource to support the development of new medical products and techniques that will further advance the quality of health care available in the U.S. and worldwide.     

Public choice economics and space policy: realising space tourism

Government space agencies have the statutory responsibility to suport the commercialisation of space activities. NASA's 1998 report “General Public Space Travel and Tourism” concluded that passenger space travel can start using already existing technology, and is likely to grow into the largest commercial activity in space: it is therefore greatly in taxpayers' economic interest that passenger space travel and accommodation industries should be developed. However, space agencies are doing nothing to help realise this — indeed, they are actively delaying it. This behaviour is predicted by ‘public choice’ economics, pioneered by Professors George Stigler and James Buchanan who received the 1982 and 1986 Nobel prizes for Economics, which views government organisations as primarily self-interested. The paper uses this viewpoint to discuss public and private roles in the coming development of a space tourism industry.     

Commercialization of space — the investment opportunities

This report by Ray Williamson of the US Office of Technology Assessment, looks at the prospects for commercialization of space into the 21st century and discusses the relative benefits of private v government investment. The report is taken from a revised version of an article originally appearing in the October 1982 issue of Futures. A fully updated paper will appear in Michiel Schwarz and Paul Stares (eds), ‘The Exploitation of Space: Policy Trends in the Military and Commercial Uses of Space’ (Butterworths, Guildford, UK, 1985).     

Asia in space: The awakening of China and Japan

The increasingly important role of China and Japan in international space activities can be seen as a threat to the two great space-exporting powers, the USA and Europe. China is already a competitor on the satellite launch market, and will soon be able to market satellites which are simpler and cheaper than those offered by Western industry. Japan is making steady progress towards autonomy in all fields of space technology. This article details the space experience of China and Japan. They are following different paths but both will have a strong presence in the cosmos by the year 2000.     

Third-party liability insurance and space launches

This article discusses a number of issues related to the US commercial expendable launch vehicle (ELV) industry and government's role in ensuring its competitiveness, particularly third-party liability insurance for space launches. The author finds that the space insurance industry has become a major constraint on the commercial development of space. The future implications are considered of US government involvement with the launch services industry, initially through providing third-party insurance itself. The author concludes that, for a stable commercial ELV industry, it will be necessary for the USA either to establish fair-trade agreements with other space-capable nations, or to maintain a significant government involvement to support the industry.     

Canadian space policy

Canada's geography made it an early leader in the development of space technology, and generated a civilian-oriented, terrestrially focused space programme with a strong focus on communications and an increasing emphasis on transferring space technology and activity from the government to the private sector. During the 1980s Canada's space programme has strengthened and broadened measurably; its now contains major projects in Earth observation and robotics as well as communications, and has diversified its international partnerships from the USA to Europe. However, persisting weaknesses in launch capability, space science and military space programmes, and the dependence of all three current major projects (Msat, Radarsat, and the International Space Station's Mobile Servicing System) on the USA represent potential vulnerabilities which require national investments and expanded international affiliations if they are to be offset.     

Space development: social and political implications

Far-reaching social and political issues are implicit in any discussion of large-scale space development. This Viewpoint argues that the evolution of appropriate political institutions to deal with these issues is likely to be at least as important as the development of new technology. If large-scale space development is to take place, global international cooperation will be essential and such cooperation will have to be underpinned by enhanced institutional and legal structures. In the shorter term, an appropriate institutional response may be the creation of a World Space Agency. However, in the longer term, we should probably view a world space programme as falling within that class of global concerns that would be most appropriately managed by a federal world government.