Interview : Happen (Mary Carey)
Happen: From perceived crazy scheme to “no one is laughing anymore” smart economic strategy, Luxembourg is positioning itself as the European central hub for space business, in particular space mining. How did this happen so fast?
Étienne Schneider: When I became Minister in 2012, one of my first trade missions outside of Luxembourg was to California. There I met Dr Simon 'Pete' Worden who was then Director of NASA's Ames Research Center and who is now one of my advisors. He was talking to me about space resources and space mining. At that time it sounded like complete science fiction to me, but as I became more and more interested in what he was telling me I realised the potential.
Dr Worden put me in touch with different people who were already active in this business, start-ups, etc., so I participated in several conferences. In March 2015, I organised a conference back in Luxembourg which was a big success. People came from all over the world to discuss space resource initiatives and to talk about all of the opportunities that we have up in space. Seeing this interest, I decided that we should go for it.
Happen: Where did you start?
Étienne Schneider: After all the discussions we had, I realised that the most important element for the development of these activities would be the legal framework. Money is important too, but most of the start-ups I saw had no real problems with money but they did have problems (or would eventually have) with the lack of a legal framework. They did not have the assurance that whatever they might find in space could be commercially used. To put it into context, the Outer Space Treaty of 1967 says that celestial bodies are not subject to national appropriation, but the status of the resources you might find there is not clearly described.
At that time I also got into a discussion with an American congressman who discussed with me that they were planning on creating a new space agency. We decided to do that as well but with a focus on space business rather than exploration.
Happen: When did you realise that the idea was starting to develop a momentum with vast potential economic benefits?
Étienne Schneider: When we launched our space resources initiative in February 2016, I was thrilled to see the reaction. Even though at the beginning people said "He has gone completely mad," there was a lot of attention. And the very fact that all the American and international newspapers, magazines and TV channels, etc., wanted to have interviews showed me that there was some kind of acceptance.
Happen: There was a lot of attention, including a Richard Quest interview on CNN.
Étienne Schneider: Following all the press attention, we then got the reaction of all these companies that started knocking on our door wanting to settle in Luxembourg. Now we have more than 60 companies and international research institutes that want to know more details about what we are doing and also want to do some kind of activities from Luxembourg. This really showed me and others in Luxembourg that the interest is really there, and that this was a serious initiative.
To put it into perspective, when we started to develop the logistics strategy here ten years ago that was easier for people to understand. They said, "Okay, you are located in the heart of Europe, this makes sense", but then it still took six years to get it started with just the buildings, and it took nearly ten to have all of these activities running, and it took €1bn of investment by the government.
Happen: Your critics will complain about your space spending, will they not?
Étienne Schneider: With our space initiatives up until now we have spent less than €15m, including but not limited to the public capital investment in one major US company. So, even without spending huge amounts of money, the interest is enormous as evidenced by all of these companies who are coming to us and all of these research institutes who want to collaborate with our institutions, such as the University of Luxembourg and the SnT [Interdisciplinary Centre for Security, Reliability and Trust] and the Luxembourg Institute of Science and Technology [LIST].
Happen: It was quite a bold move, especially as people were sceptical at first. It could have been political hara-kiri.
Étienne Schneider: Politically, this is quite a risky thing I am doing. When I launched this I thought that it would take ages in order to have a positive effect or to show results. But in actual fact, it only took a couple of months. Because all of these companies are there. Some have settled down already, and others are in the loop, ready to come and install themselves here, which is obviously good for our economy in terms of revenue but also diversification and technological progress.
I am really interested in all of this, and in the end it is a logical move for humanity. Humankind has always tried to find new frontiers and to grow past them. In this day and age we know every single square metre of our world on Earth. Why should humanity decide to stay on this one planet, especially when we have the opportunity to go somewhere else?
Happen: What is behind the SpaceResources.lu initiative?
Étienne Schneider: Of course, the long-term view of this initiative, as with any economic development, is to earn money with it and to ensure that our economy will be successful in the future as well.
We are all aware of the eventual scarcity of certain resources on Earth. 'The SpaceResources.lu initiative provides the legal, regulatory and business environment that will allow private investors and companies to explore and utilise the resources in space.
At the same time, Luxembourg was looking for ways to diversify its economy and explore new sectoral avenues. So space resources is a good fit for Luxembourg, a country that has had to reinvent itself over and over again for most of its existence. For example, when the steel industry collapsed in the 1970s, that was when you first saw the real rise of the finance industry here. We had to invent something new. At that time, we had only a small number of banks, and few people believed that we would become a financial centre. Then in 1990, we started to really succeed in the fund industry, and look where we are now. Luxembourg is the second largest investment fund centre in the world after the US and the premier private banking centre in the Eurozone. It was the same when we launched our SES initiative.
Happen: Can you give us some background?
Étienne Schneider: In 1985, a public-private partnership effort launched the Société Européenne des Satellites, today known as global satellite operator SES. SES operates a network of satellites that delivers TV and radio, internet connections, data and voice to homes and workplaces around the world.
I was recently reading the discussions from the 1980s when we first launched that initiative. At that time, we had to go to parliament in order to give a guarantee because no insurance company would underwrite this strategy, meaning that the government had to do it to the tune of 5% of their total budget. Now that was a huge risk. The plan was for SES to launch the Astra satellite network. At that time people were asking, "Why do we need satellite TV? We have TV. We have our antennas on the roof." Some people even said that the plan was dangerous because the satellites would fall down from space, damaging Earth and putting people at risk.
Happen: And the result?
Étienne Schneider: The government launched it with enormous success. Today SES is the biggest satellite operator in the world. Right now space business counts for 1.8% of GDP. This is the biggest percentage of space business to GDP for any country in the EU. Perhaps it sounds like nothing but actually this is huge. That is €1bn every year.
Happen: What is the ultimate goal for Luxembourg?
Étienne Schneider: The long-term [goal], of course, is to earn money, to assure that people will have good jobs, and to develop research activity. I want Luxembourg to become a hub for space-related research and business. This is why we call it space 'resources', because it is everything that you can do with space.
Happen: Isn't space business a huge upfront investment with a long waiting period for return?
Étienne Schneider: There are different business models and this is important. Short, medium and long-term.
There is what is already happening right now, such as with Earth observation. We have companies like Telespazio, a Franco-Italian joint venture in satellite solutions and services that is selling services to farmers. They can advise them where to put their fertiliser, or they sell satellite images to wineries and tell them whether the grapes can be harvested or not. Another short-term business model is in disaster relief, so important in recent years. These are services that already exist. Then you also have satellite GPS [Global Positioning System] and telecommunications. These are commercial activities where Luxembourg already plays a big role.
We then also look at the medium term. What can we improve now? One example is the challenge of how to improve certain elements of space resources such as the life span of a satellite or the time that you can use it. Currently, you can send up a satellite into space with, let's say, fuel to survive for five to ten years. The average lifespan of the satellites is actually decreasing year to year because of the build-up of space debris. The satellites end up needing more fuel because they have to reposition themselves to avoid collision with debris. This means they move more and burn more fuel. And the more space debris, the bigger the problem. If there is no fuel left you have to give up that satellite and get a new one. So what can a satellite company do to improve this?
Happen: Are we talking about gas stations in space? Or charging stations?
Étienne Schneider: Yes [laughs]. Even if they suffer from a lack of maturity, the technologies already exists to transform ice found on asteroids or on the moon into rocket fuel to refuel the satellite, thus increasing its life expectancy. So, whether you are considering space gas stations or rocket fuel or even batteries, you are talking about big business. That is one example, but there is also tourism. Look at what Richard Branson is doing.
Happen: Space travel: it sounds like science fiction.
Étienne Schneider: Currently, to travel to space costs $250,000, but the price is already going down. When people are cynical about space travel I always say, look, when I was a child I had two brothers and we could never go on holiday by plane. It was too expensive back then. We had to drive five of us in a car, and 1,000km was the maximum distance. Now everyone travels by plane all the time. Space tourism is the same. It is expensive now, but the price will come down.
Happen: Can you give us an example of medium-term business?
Étienne Schneider: Made in Space is a start-up that has a very interesting business model. They invented the Zero-G printer, which is the first 3D printer designed to operate in zero gravity. I went to visit them in California, and an astronaut on the ISS [International Space Station] lost his plyers and needed a new pair. A person in California sent a programme to the 3D space printer so the astronaut could print the missing tool in space. Now, if you had to transport items like plyers or even larger [ones] to space, it would cost millions of dollars.
Happen: That is a very disruptive idea.
Étienne Schneider: There are even other possible benefits with printing rather than transporting; for example, why not use recycled space debris? A long-term idea is to transfer some of the activities that are more harmful for the Earth to space. Why not? We could grind space debris and have all the material you need to produce and construct your equipment in space without harming the environment on Earth. In this sense, space debris is both a problem and opportunity. Luxembourg is actively pushing this discussion at the UN level. We want to have a regulation and a clear understanding about all the people who are responsible for space debris and how it can be recycled. This raises the possibility of another business model, being a debris (or garbage) collector in space.
Happen: Where does space mining fit in?
Étienne Schneider: That is a really long-term business model which could have a huge influence on lowering prices for raw materials and therefore the products manufactured with them on Earth. You bring one asteroid down, and raw materials prices will immediately fall [laughs].
Seriously, all of the tech devices we use require rare earth elements, and 90% of these are in China. And since they are rare they are expensive. Everyone in the world wants or needs a computer. Why don't we harvest rare earths in space? It would bring down the cost of all our IT technology dramatically, and therefore make it more accessible. This is exactly what we mean when we talk about advances in space being beneficial for humankind. Making technology available to everyone is a good thing.
Happen: We are living in a period of accelerated rates of invention.
Étienne Schneider: Invention is how the world progresses. Look at history. Sometimes when I give speeches, I quote Charles Holland Duell, former Commissioner of the US patent office. He said, "Everything that can be invented has been invented." This was in 1898!
My point is, to people who don't believe any of this will happen or think it is crazy science fiction, just look back at history. It is happening, and it is all driven by innovation. A few decades back we couldn't have imagined emails and smartphones, but now we use them every day. And more and more, disruptive ideas are pushing that invention acceleration rate. Innovation in space helps to drive invention on Earth. That is good for mankind.
Happen: What can Luxembourg offer that another country cannot?
Étienne Schneider: The commitment of the government, I think that is the most important thing. When I am speaking with various players, entrepreneurs and engineers, etc., sometimes it is not instantly obvious that they have such a thrilling idea. But what they need is someone who listens and believes in them and in their initiatives, and that is exactly what they get in Luxembourg: someone who listens and offers a clear commitment. That is why so many companies are looking at us, and not just from the US, but from many other countries as well. When I compare the SPACE [Spurring Private Aerospace Competitiveness and Entrepreneurship] Act of 2015 to our Space Resources Law of July 2017, which was voted in this summer, there is one huge difference. In the US, in order to be covered by the SPACE Act, the capital of your company has to be more than 50% American money. Many space-related start-ups are working with $10, 15, 50m, and it is relatively easy for them to find this first money. But once they launch their first initiatives on the market they will need huge amounts of money, and if they don't find American money they might not be able to continue. We don't have this kind of limitation for companies who want their headquarters in Europe.
The other advantage is that being in Europe they can work for and/or with the European Space Agency [ESA]. They are not limited to NASA. What makes us really interesting is our LuxIMPULSE programme, which can provide funding to help companies bring innovative ideas to market. Every euro we spend on ESA has to be reinvested into Luxembourg projects. Our problem is that we often do not have enough projects to put the money back, so there is relatively easy access to this funding.
Happen: What other advantages can Luxembourg offer?
Étienne Schneider: Of course, there is the legal framework and the fact that the government invests directly in companies. For this investment, we decide by two criteria. First is the idea in itself: do we think that this is an idea that can really fly? Secondly, who are the other shareholders? Is it of interest for us to be at the same table with them? This is exactly what we did with Planetary Resources, an asteroid mining company. This direct investment is good for us and good for the companies. When companies are looking for new money they can say that the Luxembourg government is a shareholder. That gives them credibility. Then, of course, there is our research budget because we are in the Horizon 2020 programme from the European Commission. We committed ourselves to spending 2.3-2.6% of our GDP on R&D, so we need to increase that spending.
Happen: Can you tell us more about the national space agency project?
Étienne Schneider: This is another advantage. Maybe our most important idea is to launch a space agency in Luxembourg with a public-private partnership where the government and private investors alike can take a share.
This PPP fund will decide which companies we will invest in and which we will not. We are in early discussions with the investment fund industry, and there is already a great deal of interest. This will be a unique space agency in that it will not focus on space exploration but on space business, and when you focus on business, investors are interested.
Happen: When people see some of the companies you are attracting like ispace, the Japanese company developing microrobotic technology for space, they will still ask: when is Luxembourg's first space prospecting mission?
Étienne Schneider: As a country we will not do space exploration. What is true is that we want to attract some of the companies that are involved in these activities. These companies bring other benefits to Luxembourg beyond revenue such as R&D. ispace is a good example, as they are working together with LIST on several key technical services, including payload development, engineering and integration. This project aims to bring an innovative mass spectrometer developed by LIST to the surface of the moon. Weight is an issue in space, so they are trying to reduce the weight. Right now this mass spectrometer weighs similar to two washing machines, and they need to reduce it to the weight of a shoebox.
Happen: What sort of long-term ROI is Luxembourg forecasting?
Étienne Schneider: Like space, there is seemingly no limit, with very little involvement of the taxpayer.
Happen: What are the benefits for other sectors?
Étienne Schneider: We are trying to put all of the different bricks together. I discussed the HPC [high-performance computing] within the framework of developing space activities. What we saw when we visited California was their quantum computer which you need to calculate where you are going and to land your rover on the moon. There is a large amount of commercial activity in space that will require huge calculation power and HPC. To purchase one of these supercomputers, we took the lead on a centralised solution, which industry leaders backed, by asking the European Commission to help finance the project. We were joined by France, Italy, Spain, Germany, Portugal and the Netherlands. The computer will reside in Luxembourg by 2018 and will have the power of one petaflop per second, or one thousand trillion calculations per second.This calculating power will be accessible to all companies, not just space.
Happen: Can you give us another example?
Étienne Schneider: Artificial intelligence is already being used and will be further developed to make all of these initiatives in space possible, particularly in the first stage. This is true for space mining, which will not be done with people. We are in discussions all the time with big mining companies because they are very interested in what we are doing. For example, the difference between deep-sea mining and space is not that big. For many of the space-related start-ups, part of their strategy is to have short-, medium-and long-term plans so they can make money right away to fund the longer-term part of their business plan.
Happen: What sparked your interest in space?
Étienne Schneider: I hate to disappoint you, but I was never particularly interested in space. I never wanted to become an astronaut [laughs]. It was just that when, in my capacity as the Minister of the Economy, I analysed space business activities, I saw the huge opportunity and realised it is not a question of whether all of these activities will happen in space, but when.
I really want to do something for my country. I want us to be in the forefront, an early adopter. Luxembourg has a track record of being successful when it takes risks. This is true when we invested in the SES initiative. This is true when we took on our Maritime Pavilion [flag registry which establishes Luxembourg's maritime business governed by the Act of 9 November 1990] in a landlocked country [laughs]. You need to take on risks to be successful.