ESPI welcomes this initiative as a first step towards addressing Europe’s competitiveness, resilience and innovation concerns. However, as the legislative process unfolds, several provisions raise questions regarding implementation, legal certainty, proportionality, and the balance of competences between EU institutions, Member States, and international actors. This Brief explores these challenges, identifying areas that will be critical to ensuring the long-term economic competitiveness and resilience of European businesses.
1. Objectives, Scope and Roles in an Evolving Regulatory Landscape
On June 25th, the European Commission unveiled its legislative proposal for the EU Space Act, a regulation designed to establish a harmonised legal framework for space activities across the European Union. Recognised as a strategic priority in the Draghi and Letta reports and the Competitiveness Compass, the Act aims to foster a cohesive internal market for space services, aligning with Article 114 of the TFEU.
Indeed, the lack of rules at the European level to guide the implementation of international obligations has led to the perception of a fragmented legal landscape with 15 national space laws, and more in the process of being drafted or released. The legislative push is rooted in growing concerns about the safety, security, and sustainability of space operations and Europe’s competitiveness.
Despite outspoken opposition from several countries, who favour a (more flexible) directive, the Commission chose to proceed with a proposal for a regulation—a binding and directly applicable legal instrument. The proposed Act, consisting of 119 articles and ten annexes, is underpinned by an impact assessment. As is, the Act is scheduled to take effect from 1 January 2030, with a two-year transitional period. As outlined in the proposal’s first objective, competitiveness and innovation are key metrics by which the regulation’s success will ultimately be measured. Moreover, in order to ensure an adaptive regulatory framework, the Commission remains empowered to adopt implementing and delegated acts throughout the implementation of the Regulation.
1.1 Unpacking the Act
In terms of scope, the EU Space Act will apply to EU and non-EU entities providing space services in the EU, including satellite operators, collision avoidance service providers, primary providers of space-based data, and international organisations operating satellites and providing services within the EU. Notably, military and national security-related space assets are excluded, and the regulation only applies to commercial operations up to the geostationary orbit – not beyond. The proposal introduces a unified ‘authorisation’ framework whereby a space service provider authorised in one EU Member State will be recognised across all Member States, while national authorisation processes will remain intact. This simplification is designed to reduce administrative burden while maintaining oversight. However, the regulation excludes areas that fall under the exclusive competence of Member States or are governed by other EU frameworks; including market access, spectrum allocation, liability and insurance.
Recognising the principle of subsidiarity, this could hinder the creation of a level playing field globally, and even more so within Europe, as it is exactly the aforementioned regulatory areas that would be key in establishing a true level playing field on the single market. Not being able to address them will inevitably hinder the Act to achieve its objectives.
The Act establishes a multi-layered governance structure involving both European institutions and national authorities with the ambition to ensure effective implementation, supervision, and enforcement. By distributing responsibilities across Member States, Commission and EUSPA, the Act tries to balance regulatory coherence with technical expertise, while supporting nations in building capacity and ensuring consistent application across the Union.
Member States will be required to designate or establish National Competent Authorities (NCAs), equipped with broad supervisory, investigatory, and sanctioning powers. These authorities will be responsible for issuing authorisations and overseeing the compliance of Union space operators. To support the technical aspects of compliance, Member States may designate Qualified Technical Bodies (QTBs); responsible for evaluating space activities according to the technical requirements. Member States must appoint a dedicated authority—potentially the National Accreditation Body (NAB) —to assess, designate, and monitor QTBs. The regulation requires that decisions made by QTBs must be subject to appeal, ensuring due process. The Commission must be notified of the designated QTBs through a formal application process. EUSPA will take on several new operational responsibilities under the Act. These include conducting technical assessments for the authorisation and supervision of EU-owned space assets and third-country operators. EUSPA will also manage the Union Register of Space Objects (URSO) and maintain a central contact list for high-interest event alerts. It will issue e-certificates attesting compliance, support Member States without QTBs, and assist the Commission through newly established internal bodies such as the Compliance Board and the Board of Appeal, with the latter serving as a safeguard for the rights of affected operators. As currently proposed, ESA is limited to a possible support to Member States by providing technical assessment.
The regulation sets an average duration of 12 months for completing the authorisation process. However, this timeline may be paused if additional clarifications or assessments are needed, offering some flexibility for complex cases. Based on the draft, four types of authorisations can be identified:
| EU space operators | NCAs will oversee the process of granting authorisation to Union space operators nationally. NCAs will inform EUSPA of all authorised space operators, and the latter will register them in URSO. |
| EU operators to operate or launch EU-owned assets | The Agency will be in charge of the technical assessment, based on which the Commission will issue the authorisation. The Agency will then register in URSO. |
| Third-country operators providing space-based services in EU | Beyond cases where the Commission adopts an equivalence decision, third-country operators will have to designate a legal representative in EU. To obtain registration in URSO, they shall apply to EUSPA, including evidence needed to demonstrate compliance. Not later than 5 months from the application, the Agency shall propose to the Commission to take a decision, and the Agency will issue e-certificates attesting conformity. |
| International organisations | Regulation is proposed to apply to assets operated by international organisations such as ESA or EUMETSAT. The decision is provided by the Commission, while EUSPA provides the registration. |
While later chapters address specific challenges, it will be important to ensure a clear nomotechnical basis throughout the act and annexes, especially regarding inconsistent terminology. An example is the Union Register of Space Objects, which serves as a reference register containing, among others, a list of authorised space operators and services.
2. Charting the Trajectory: From Needs to Aspirations to Emerging Questions
This section provides a reflective analysis of the key underlying ‘needs’ that the Act seeks to address. It further offers an evaluation of the feasibility of these goals and the potential regulatory, operational, and economic challenges. The declared objectives are outlined below.
| Governance & global reach | Safe, sustainable and resilient infrastructures |
Future market development |
| One rulebook for all EU member states to reduce legal fragmentation, accelerate innovation, and lower compliance costs.
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Safer orbits: Managing traffic in an increasingly crowded space environment—with over 11,000 active satellites and 50,000 more expected by 2035.
Cybersecurity: Bridging gaps left by the NIS2 and CER Directives to better protect satellites, with industry losses from cyberattacks currently claimed at €1 billion per year. Space service resilience: Protecting critical services like satellite navigation and EO, which are vital to the EU economy. Environmental sustainability: Promoting greener practices in the space sector, especially in response to the carbon impact of small satellites. |
Space is the next service frontier: In-space operations unlock new markets while keeping infrastructure safe and sustainable. |
2.1 Governance and Global Reach Challenges
Regulatory Harmonisation: Based on the Commission’s reasoning behind the Act, the Union is currently navigating a fragmented regulatory landscape, with diverging legal frameworks that introduce complexity and administrative burdens for companies operating across borders. For instance, spacecraft that meet the regulatory standards in one nation may be prohibited from being launched or operated in another, owing to stricter design or safety requirements.
Likewise, inconsistencies in SST data formats, sharing interference, and cybersecurity protocols create barriers for the cross-border provision of space services. Without substantial regulatory harmonisation, these discrepancies risk undermining the efficiency of the internal market and limiting market access for space operators, particularly SMEs.
Although hard evidence of the above is limited, a key strategic question remains: which industries, and as proxy Member States, will benefit or be disadvantaged by the regulation? Stricter EU-wide rules could favour companies in countries with already high standards, as they face lower adaptation costs. Meanwhile, firms in less-regulated Member States may struggle with heavier investment burdens. These risks tilt the competitive balance, benefiting some national industries over others, an outcome that should be considered in a short to mid-term perspective.
Additional concern relates to the potential overlap between authorisations granted under the EU Space Act and those issued under national space laws (as required by international space law), as well as the procedures for extending an authorisation from one country to others, whether through immediate recognition (by issuing the e-certificate) or by requiring a formal validation process.
Governance: While it intends to respect national competencies under the principle of subsidiarity, the implementation of the proposed regulatory is expected to be both complex, lengthy and costly. One important consideration when reviewing the section on Competent Authorities is the potential impact on smaller and mid-sized Member States. For instance, the supervisory responsibilities outlined are extensive and require not only a highly skilled workforce but also a significant increase in staffing. NCAs are expected to exercise supervisory, investigatory, corrective, and sanctioning powers. In addition, the Commission and the supervising Agency are granted substantial investigative powers, including the authority to conduct on-site inspections, or potentially dawn raids. Notably, this authority extends to third-party entities within the Union as well as to intergovernmental organisations, without clearly defined checks and balances. Non-compliance may result in severe penalties, including fines of up to 2% of global annual turnover or twice the amount of unlawfully gained profits or losses avoided. However, the legal basis for such inspections and investigations remains unclear, particularly when they concern entities under the jurisdiction of individual states and international organisations. The tone and scope of these provisions raise legitimate concerns about proportionality, jurisdiction, and respect for national sovereignty, and due process.
Global Reach: Enforcement remains a key issue: how sanctions will be applied and whether the EU can enforce compliance across Member States and external actors is not yet clear. It will be important to avoid a situation where EU companies operate as a vehicle of extraterritoriality, pressuring those who depend on, or collaborate with, non-EU companies, as this could place a significant burden on them. International coordination adds another layer of complexity. The Commission anticipates a broad application of mutual recognition principles—via “equivalence” rulings—with non-EU spacefaring nations. While this could facilitate cooperation and prevent regulatory clashes, it could impact how the level playing field envisioned for EU operators will apply globally.
Negotiating binding international agreements with major actors like the U.S. and China will be both politically sensitive and slow-moving. In case of non-mutual recognition, it is unclear how the requirement for authorisation of third-party operators providing space-based services in the Union will be enforced, especially when extended to launcher or site operators exclusively operating in third-countries.
Finally, the success of the Act will depend less on its legal text and more on the regulatory culture that develops around it. Practical issues—such as regulators’ openness to pre-licensing discussions, guidance, and training—will play a decisive role. Jurisdictions like the UK and France already incorporate such proactive engagement, accelerating compliance and fostering innovation. Efficient implementation of the regulation would benefit from similar dynamics.
2.2 Safe, Sustainable and Resilient Infrastructures Challenges
As outlined in the impact assessment of the Act, the proposal limits its scope to what is needed to achieve the objectives pursued by the initiative, avoiding disproportionate costs that harm the overall competitiveness of the EU space industry. The principle of proportionality is then articulated throughout the Regulation, with the action aiming to remain technology neutral and not jeopardising Member States’ competence on national security matters. To this end, the Act introduces a gradual regulatory regime, taking into account, for example, the risk profile and size, as well as the nature, scale and complexity of the space activities.
An examination of entities subject to the various requirements reveals ambiguities. In particular, Article 63 seems to only apply to Union spacecraft operators, but not consistently to entities from third countries.
On the one hand, Union spacecraft operators must ensure that a spacecraft has the technical means necessary for tracking and accurate determination of its orbital position, leaving it to the Commission to specify the level of accuracy required for tracking (by means of implementing acts). On the other hand, Article 15(1) requires third-country space operators to enter a contract with a public or commercial collision avoidance CA service provider. However, it does not extend to this group the obligation imposed on Union operators to have such technical means for tracking and accurately determining their orbital position. This could create a competitive disadvantage by imposing higher obligations and costs exclusively on EU entities compared to third country entities.
With regard to manoeuvrability requirements, which also apply to third countries, these appear to deviate from established ESA standards and seem to require that all objects above 400 km be manoeuvrable, a provision that does not appear in either the ESA guidelines or the FCC rules and is not necessarily in line with global best practices, although point 2 of Annex IV to the Act seems to provide for the possibility of non-manoeuvrable spacecraft to cooperate with Union CA service providers under best efforts. Yet, although on-board propulsion capabilities are becoming increasingly accessible even for small satellites and propulsion systems are becoming more efficient, concerns remain that the uniform application of this requirement could pose technical or financial difficulties for some missions and potentially constitute a barrier to entry into the EU market.
This integration faces a challenging reality: its ambition may struggle under the strain of its own complexity. The risks of overregulation and fragmented governance could undermine the coherence needed for success. To realise its full potential, the vision must build on existing coordination and communication among European actors—otherwise, it may become more disjointed than transformative.
In this regard, the value of ESA’s technical expertise and standardisation know-how should be leveraged, together with Member States’ technical competencies. Specifically, these should be strengthened in relation to the technical assessment of the Union’s authorisation requirements, both through the agreement referred to in Article 108, which can reinforce the tripartite relationship between ESA, EUSPA and the Commission defined in the FFPA in relation to the implementation of the EU Space Programme, and by making use of the Agency’s technical expertise.
According to the draft regulation’s impact assessment, the new compliance requirements could lead to a significant rise of up to 10% for platform manufacturing costs. These burdens may arguably be offset by scale, but this is not guaranteed, especially given the profitability challenges many space companies are already facing. While the Commission argues that the higher upfront costs will be “completely offset” by long-term benefits—primarily through enhanced space sustainability—the cost-benefit analysis rests on a optimistic assumption that the Act will reduce orbital debris by 50% by 2034.
This projection underpins the entire regulatory justification, yet its achievability remains highly uncertain. In addition, there is a risk that such an approach will lead to forum shopping, whereby space operators may choose to establish themselves or seek authorisation in countries with less stringent, more favourable, or faster national regulatory regimes, even if they plan to operate across the EU.
2.3 Future Market Development and its Challenges
Regardless of the granularity of the requirements introduced and the potential challenges linked to the evolution of European governance in implementing the Act, this proposal attempts not only to provide a stable and predictable business environment, but also to catalyse the emergence of new markets and service ecosystems within the Union.
Considering the areas of influence of the requirements mentioned in the previous paragraph, some of the most significant effects are the growth of market segments or services that are currently underdeveloped, and where Europe could position itself as a leader. In fact, with the tightening of regulatory requirements for satellite safety, collision avoidance and post-mission disposal, the aim is to reach an increase in demand for in-space operations and services, including life extension, refuelling, servicing and active debris removal, creating commercial opportunities.
The requirement for trackability and the mandatory adoption of CA services will then give a further boost to the development and provision of SST services, including commercial offerings, which are currently only envisaged as an evolution of the existing EU SST Partnership. Furthermore, the implementation of physical security and resilience requirements for space systems will allow for greater integration of cyber and space security dimensions, with a consequent evolution of the cybersecurity ecosystem also in the space domain.
Unlocking this market potential also requires greater flexibility within the scope and conditions of authorisations. Licenses are often based on rigid parameters, e.g. fixed orbital altitudes or limited mission durations, that can prematurely halt operations, even when companies remain technically capable. This inflexibility hampers the development of dynamic services like ISOS, which depend on adaptability across orbital regimes and timeframes. Future authorisation models should therefore embed greater operational flexibility, enabling services to respond to in-orbit failures, maintenance needs, or disposal requirements. Well-designed flexibility would not only eliminate unintended market barriers but also drive growth.
The development of a dedicated, innovative and scalable European industry to support and provide the services necessary for the implementation of these requirements is not only a necessity but, above all, an opportunity. Taking the ISOS and SST capabilities as examples, the insufficient development of both of them highlights a critical dependency. This means not only working on the regulatory harmonisation but also using this regulatory momentum to substantially stimulate investment and demand, fostering the growth of a “commercial ecosystem” necessary for both the independence and competitiveness of the Union in global space markets. Notwithstanding, care must be taken to ensure that technical requirements do not discourage entrepreneurship in a market that inherently relies on risk-taking.
3. Innovation and Competitiveness Imperative: Is the Challenge Truly Addressed?
With manufacturing and launch services costs projected to rise, European companies will be further challenged, especially given the ongoing profitability pressures across much of the space sector. When assessing the proportionality between costs or burdens and expected benefits, it’s essential to consider not only the direct financial impact but also the perceived burden. Excessive or unclear requirements risk disincentivising innovation and entrepreneurship, particularly in a sector where speed, agility and risk-taking are critical.
The Space Act can represent a powerful governance instrument that could further consolidate the EU’s strategic role in the space domain—both within the EU and on the global stage. As outlined in the draft, one of the Act’s key objectives is to promote innovation and foster a competitive business environment. To achieve this, the current approach lacks concrete measures to incentivise and prioritise markets for space-based services and solutions beyond hopeful second- or third-order effects. Market creation is not merely complementary—it is essential for ensuring the long-term sustainability and global competitiveness of the European space industry. A synergistic approach that aligns regulatory action with demand stimulation and innovation will be critical.
Furthermore, the Commission continues to promote strategic autonomy and European non-dependence in key space technologies, essential for the evolution of Europe’s space systems. However, without an end-to-end level playing field that supports industrial growth, Europe risks falling behind international competitors. Other space-faring nations have adopted national or regional policies to protect their industries, often excluding European companies from key markets. This is most evident in U.S. policy, but similar barriers exist in India, Japan, and some African nations. These countries support their private sector to advance key space capabilities.
While mindful of the risks posed by restrictive policies to international trade, Europe must still equip itself with the right tools and policies to grow with confidence and legitimacy. This is especially important in areas like launch services, satellite manufacturing and operations, and data processing, particularly for missions linked to national security and strategic to build control within the digital economy. Building on the EU Space programme regulation, and aligning with the recently proposed European Competitiveness Fund Regulation, the EU could introduce a Europe-wide preference for institutional launch services, and further consider it within the framework of an EU Space Act.
Finally, like other critical sectors, the European space industry requires effective monitoring of foreign investment to safeguard both competitiveness and national security. This is particularly relevant when compared to less sensitive sectors such as commercial aviation. EU Regulation 2019/452 (the FDI Screening Regulation) provides an essential framework for assessing foreign direct investments on the grounds of security and public order. This regulation reflects a growing EU consensus on the importance of scrutinising foreign investments in strategic industries, including space. While blanket restrictions or rigid limits would harm the sector, more structured mechanisms—such as investment screening platforms can help policymakers better understand investment patterns. Additionally, notification requirements (inspired by merger control procedures) could be considered for transactions involving investors from jurisdictions with perceived high risks to public security or order.
4. Towards Implementation: What Comes Next?
The proposed regulation represents a clear and welcome political signal that the Union aims to play a broader and more strategic role in the space domain. It also positions space as the critical linchpin of Europe’s policy ambitions, from tracking emissions under the Green Deal to shaping the CAP, driving the energy transition, and powering the digital agenda. Much of the Act’s concrete impact remains difficult to assess in the absence of implementing acts, which will be crucial for defining operational aspects and setting the base for standardisation. While the text largely avoids rigid prohibitions, its conceptual nature means its full implications will only become clear once secondary legislation is in place. In addition, the Act’s standardisation framework, particularly through Article 104 and recitals 33–34, has the potential to develop the Commission’s role in promoting standardisation efforts in space. While the Commission may request European standardisation bodies to develop standards for specific technical requirements, such as light and radio pollution or electronic certificates, this approach may shift some standardisation responsibilities from ESA’s well-established technical domain toward a framework more closely guided by political and regulatory considerations. The upcoming international agreement between ESA and the Union presents a key opportunity to clarify and evolve the governance relationship between the two entities, leveraging existing expertise and ensuring greater coherence and complementarity. The implementation of the Act will also depend on a significant expansion of the regulatory and technical responsibilities of both the European Commission and EUSPA.
The true potential of the Act lies not only in addressing internal market dynamics but in unlocking the EU’s ability to lead globally. By shifting the focus beyond internal mechanisms to strategic industrial implementation, it can serve as a springboard to position the EU industry at the forefront of emerging global services, such as ISOS, and sustainable operations. This is a chance to shape international standards, build competitive advantages, and affirm the EU’s leadership in future-oriented, responsible innovation. This requires that, beyond ISOS, the full spectrum of the 1T$ space economy is empowered.
While Europe’s leadership in promoting environmental responsibility in space comes at a cost, this might also reflect a conscious choice to lead where global efforts have fallen short. In the face of limited progress at international fora, the EU does have an opportunity to position itself as a viable regional and then multilateral platform for advancing responsible space governance. Indeed, the Act has the potential to influence global norms through mechanisms of equivalence, encouraging other countries to align with EU standards. For this influence to materialise, it would be, however, essential that it be supported by robust programmes and a competitive industrial base capable of delivering tangible market benefits. Yet crucial, a factor in realising Europe’s ambitions is the availability of adequate funding. The upcoming negotiations on the next MFF will be pivotal in determining whether sufficient resources can be secured to support the objectives outlined in the Act and to enable market development.
The Act’s long lead time could reduce its immediate impact. With full implementation targeted for 2030, it risks being outpaced by rapidly evolving commercial realities outside the EU. By the time the new rules take effect, several large constellations, notably the evolution of SpaceX’s Starlink, with a recently announced new D2D constellation, Amazon’s Kuiper, and Chinese Guowang and Qianfan, will likely already be operational, limiting the EU’s leverage if not in the remit of its own constellation. Within and beyond the scope of the Act, further programmatic actions and market-enhancing initiatives will be crucial to properly provide for a positive economic impact on the single market.
