2030 ENVIRONMENTAL ISSUE

IN THE BUSINESS MODEL

OF CIVIL AND DEFENSE

AEROSPACE INDUSTRY

Georges Harari & Hugo Wagner

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Environmental responsibility is nothing new for the aerospace and defense industry. In the 1970s, well

before the Kyoto Protocol, the industry was already working hard to reduce its noise emissions. Year

after year, the environmental agenda has shifted to NOx emissions because of their impact on local air

quality around airports. More recently, the aviation industry has been challenged to reduce its

contribution to the greenhouse gas emissions that are responsible for global climate change. As new

issues have arisen, previous concerns have not gone away. The aerospace and defense industry is

now facing the challenge of making progress across a number of different fronts.

Over the last four decades, new technology has played a major role in the aerospace and defense’s

industry response to key environmental challenges. New technology helped OEM (Original Equipment

Manufacturer) to reduce cost and boost efficiency, and even gave them an edge in the marketplace

through new innovative products.

New generations of aircraft became quieter and more fuel-efficient, with reduced emissions: between

2001 and 2008 alone the industry improved fuel efficiency by 16%.

The combined reality of the growing number of environmental challenges facing the aviation industry

and the increasing concern about global climate change while the air traffic is forecasted to double

in the next 15 years emphasizes the need to go one step forward. Airlines, manufacturers, air

navigation service providers and airports committed to stop the growth of the emissions from 2020 and

to have emissions by 2050 compared to 2005 levels.

After having analyzed more in details the key environmental, energy and geopolitical challenges

faced by the aerospace and defense industry, we will provide a global overview of the solutions

developed or under development to meet the global challenge of climate change in a timely and

effective manner. An interesting trend that will be worth looking at in terms of potential economic

opportunities is the one that make global environmental surveys and scientific studies dependent upon

airborne and spaceborne technology and services. From the oceans to the atmosphere, the civil and

military aerospace industry’s future business plans can offer strategic assets to monitor, study, and

ultimately protect the environment. Following the current trends happening in the maker movement,

remote sensing technology is also expected to get increasingly adopted for civilian use and real-time

environmental data collection of the changing Earth will continue to create new markets for the

aerospace industry.

As we strongly believe that technology alone is not the solution, we developed a four-pillar strategy to

build a greener future by looking at: alternative fuel, technological advancements, improved

infrastructures, operational and economic measures and their consequences on the business model of

the Aerospace and Defense Industry.

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Key environmental, energy and geopolitical

challenges at a glance

1. Taking responsibility for a planet under pressure…

Few decades after the birth of aviation, air transport has become a powerful driver of innovation,

economic and social development. Nearly 57 million jobs and $2.2 trillion in global GDP are supported by

aviation1. Moreover 35% of world trade by value travels by air and industries in all countries rely on the

speed and efficiency of aviation to provide the goods and services required for modern life. Aviation also

plays an important role in military activity. As such, aviation affects the lives of citizens in every country in the

world, regardless of whether they fly or not.

However, these benefits have emerged with environmental

issues. It is now widely acknowledged that the human

activities impact the environment, with one of the biggest

contributors to climate change being CO2, the primary

greenhouse gas emitted through human activities. In 2011,

air travel emitted 676 million tons of CO2 or around 2% of the

global total2.

Instead of blaming a specific industry, we rather propose to

focus on climate change consequences on Earth.

Indeed, even if the aviation industry’s contribution to global

man-made CO2 emissions remains limited, it has a greater

impact than the same emissions made at ground level. In

addition, the aviation has increased NOx and ozone

concentrations at cruise altitudes and is causing major

changes to the planet’s climate: changes to weather

patterns (i.e., rainfall, temperature, etc.), and, for supersonic

aircraft, stratospheric ozone depletion and the resultant

increase in UV-B radiation at the Earth's surface3.

The environmental impact of aviation is not limited to CO2 and NOx but also includes perceived noise. As

aviation grows to meet the economic and social needs around the world, the impact of aircraft noise can,

without strong actions, become a burden for communities located close to airports. Looking to the future,

the reduction of noise exposure around airports may continue until the effect of retiring the older and noisier

aircraft will remain stronger than the effect of growing traffic.

On the whole, the aviation sector recognizes the growing and urgent need for society to address the global

environmental challenge by reducing the fuel consumption and emissions. Over the last 40 years, the

aviation industry has already achieved significant reduction in emissions and noise: 70% reductions in CO2

emissions, 90% NOx emissions reduction and 75% reduction in noise4. Without a doubt, by 2030, the players

of the aerospace and defense industry will go ahead in that direction in order to mitigate their

environmental impact and reduce not only CO2 emissions but other emissions linked to climate change and

air quality.

In other words, the aerospace and defense industry has to decouple the expected market growth with the

C02, NOx and noise emissions to reach a sustainable path!

1 A sustainable flight path towards reducing emissions, UNFCCC Climate Talks, Doha, November 2012 2 ICAO Environmental Report 2010 : Aviation and Climate Change 3 Aviation and the Global Atmosphere, 1999, IPCC 4 Fourth Assessment Report : Climate Change 2007, IPCC

Aviation;

2% Road;

10% Other

Transports

; 2%

Forestry;

17%

Industry;

19%

Energy

supply;

26%

Waste; 3%

Agriculture;

14%

Building;

8%

Global Greenhouse Gas Emissions by Sector, 2014

Source: IPCC 4th Assessment Report, 2007, Technical

Summary and Special Report on Aviation and the

Global Atmosphere.

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2. …facing the end of the age of natural resources with new geopolitical

tensions

Beyond the environmental prospective, the aerospace and defense industry will have to face the decline

and depletion of natural resources in the next future. For instance, most sources tend to believe that with

the expected world growth, the supply of oil from conventional sources may only be available for several

decades to come.

The world proven reserves of oil are 164.5 billion tons (1208.2 billion

barrels)5. Assuming some very simple assumptions (current level of

consumption remains constant over time, estimates of fossil fuel reserves

are accurate), industry leaders and analysts tend to forecast that the oil

production will peak between 2010 and 2030 and that the reserves will

near an end between 2050 and 2075.

Although technological advances, new discoveries and lower

consumption may tend to make resources last longer, most can agree

upon: there are practical limits to the use of petroleum and its price

should mechanically increase.

An analysis of airlines costs done by the

International Air Transport Association

(IATA) in 2001 has shown that the fuel

accounted for 13.6% of the total costs

of all major airlines globally. In 2008, the

proportion had risen to 32.3%. Even if

the oil price has recently decreased,

analysts forecast an upward tendency,

which might become the number one

concern of airlines worldwide.

Unfortunately, the expected natural resources depletion is not limited to oil but to a various range of

materials used by OEMs. This trend might create tension and disputes between producers and consumers

and push OEMs to shift from fossil fuels to the use of renewable energy. Using the example of oil, the

worldwide reserves reside in the Middle East (61.5%), the Russian Federation (6.6%), and Venezuela (6.6%),

which are, politically speaking, unstable regions of the world.

Moreover, geopolitical tensions impact crude oil prices. For instance, during the Gulf War that began in

1990, WTI (West Texas Intermediate) and Brent crude oil prices doubled in the beginning of 1990 and

dropped ~30% by the end of that year. These geopolitical tensions led to supply disruptions, which

increased global crude oil prices.

5 Report on Alternative Fuels, IATA, 2007

“It is pretty clear that there is

not much chance of finding

any significant quantity of

new cheap oil. Any new or

unconventional oil is going to

be expensive.”

Ron Oxburgh

Former Chairman of Shell, 20081

Fuel;

14%

Labor

; 28% Other

; 58%

Fuel;

32%

Labor

; 20%

Other

; 48%

Fuel costs as a proportion of total airline costs, 2001 and 2008

Source: MarketLine Case Study: The 787 Dreamliner

Air transport is a growing and increasingly vital part of our modern life as military sector for our

safety. At the same time, the aerospace and defense industry is facing an unprecedented set of

challenges which might limit its expansion and social benefits: noise, air pollution around airports

and influence on climate change.

Even if the aviation industry’s contribution to global man-made CO2 emissions remains limited

(around 2%), people are more and more concerned about it. Consequently, the aerospace and

defense industry is organizing itself in order to meet the need of our society.

Meanwhile, the industry will have to face the decline and depletion of natural resources, which

might create economic and geopolitical tensions.

The combination of the environmental, energy, economic and geopolitical threats is a real

challenge for the future of the aerospace and defense industry. Far from being discouraged, the

airlines, manufacturers, air navigation service providers and airport are playing a leading role to

tackle these issues. They have even fixed some ambitious reduction targets which foster airline

investments and positively affect the entire industry.

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Four strategic drivers to tackle environmental issues

In 2008, airlines, manufacturers, air navigation service providers and airports came together in Geneva and

signed a commitment to a pathway to carbon-neutral growth. In the short-term, between 2010 and 2020,

aviation is committed to improve its fuel efficiency by an average of 1.5% per year, representing a further

efficiency gain of 17% by 2020 or 2.2 billion tons of CO2 savings. The industry will then work towards a target

of having net CO2 emissions by 2050, based on 2005 emissions.

These commitments were reaffirmed and expanded in the industry’s declaration on sustainable growth

signed at the 2012 Aviation & Environment Summit.

Meanwhile, in October 2010, at ICAO (International Civil Aviation Organization), 179 states reached a

unanimous and global agreement to address international aviation emissions, formulating global targets for

the sector, along with a set of principles for the use of economic measures, while taking into account the

specific needs of developed and developing countries.

How will carbon-neutral growth on the way to a carbon-free future impact the business model of civil and

defense aerospace industry? In the next sections, we attempt to lay the foundations of a global approach

based on a four-pillar strategy and highlight the consequences on the business model of Civil and Defense

Aerospace companies. Moreover, as we have to find a global solution to a global problem, we decided to

include a maximum of industry stakeholders in the scope of our multi-faceted approach: military actors,

airlines, manufacturers, fuel suppliers, airports, and air navigation service providers.

1. Alternative fuels and smart fuel savings

One of the biggest changes in the business model of civil and defense aerospace companies will come

from reliable alternatives to conventional jet fuel that are sustainable and have a smaller carbon footprint.

In contrary to the ground transport sector, aviation has no alternative to liquid hydrocarbon fuels in the next

decades. Thus, sustainable aviation biofuels are one of the most promising solutions to meet the industry’s

ambitious carbon emissions reduction goals in the short terms.

Indeed, sustainable biofuels for aviation could reduce CO2 emissions by 80%, on a full carbon life-cycle

basis. Thus, IATA’s focus is on biofuels sourced from second or new generation biomass. These fuels can be

produced sustainably to minimize impacts on food crops and fresh water usage.

Between 2008 and 2011, at least ten airlines and several aircraft manufacturers performed flight tests with

various blends containing up to 50% biojet fuel and demonstrated the feasibility of biojet fuel. For instance,

Lufthansa successfully completed a six-month series of commercial flights and demonstrated that the use of

biofuel didn’t have any long-term effect on engines.

Moreover, the complex supply chain to put in place has been widely studied by KLM. The Dutch airline

conducted 26 long-haul flights in 2013 and demonstrated the ability to organize and coordinate a complex

supply chain in order to fly regular scheduled flights on biojet fuel.

As the technical feasibility has been proven, the usage of biojet fuel up to 50% has been certified for

commercial passenger flights in 2011.

Nevertheless, a certain number of problems remain and need to be resolved in the coming years to reach

a TRL (Technology Readiness Level) matching the future demand of approximately 100 Mt in 2050.6

Among them, the commercial and political aspects are certainly the biggest concern as biojet fuels are

currently more expensive than Jet A/A. The European Union could take inspiration from the United States’

combination of incentives, which can open the possibility of price-competitive biojet fuel. An example of

late 2013 is the United Airlines purchase agreement (reported as price-competitive) with AltAir Fuel to

purchase five million gallons per annum for three years.

6 Carburants du Futur, 3AF, 2013

4

0%

20%

40%

60%

1970 1980 1990 2000 2010 2020

In addition, several engines OEM are developing advanced flight data tool issuing smart recommendations

to improve flight operations, reduce fuel consumption and CO2 emissions. While reducing airline costs, this

service could be a new source of revenue for OEMs.

2. Incremental technological progress

The industry is working and making great advances in technology related to aircraft, engine and systems

technologies that help reduce fuel burn and carbon emissions. These innovations are boosting airlines

replacement fleet and represent a tremendous source of revenues for OEMs. Some 5,500 aircraft will be

replaced by 2020 or 27% of the total fleet, representing $1.5 trillion resulting in a 21% reduction in CO2

emissions compared to business as usual.

In very short term, airlines are already modifying their existing fleet by using state of the art technologies

helping them improve aerodynamics, reduce weight and consumption. OEMs and Tier-1 suppliers are

seizing these business opportunities by providing retrofits on existing aircrafts. For instance, Boeing is

proposing blended winglets as a retrofit installation for the 737-300/-500/-700/-800/-900, 757-200/-300, and

767-300ER. The drag reduction provided by blended winglets improves fuel efficiency and thereby reduces

CO2 emissions and community noise.7

Meanwhile, numerous business opportunities have arisen in order to reduce weight and, thus, fuel

consumption such as: reduce weight in the food, drink and catering; use lighter seat (such as Expliseat

which divided the weight by three vs. standard seats), carpets and types of in-flight TVs; replace cargo

containers or/and the library of operational flight manuals. For instance, Qantas’ program of weight

reduction achieved an average of 119kg reduction per aircraft.8

Another way to reduce weight is to use more composites in aircraft design. Indeed, composites improve

efficiency and aircraft performance by reducing airframe weight with the additional benefit of reducing

operating costs. Based on historical data, experts project that composites will represent almost 50% of new

Airbus aircraft designs by 2020.

In the medium term, aircraft and engine manufacturers are working closely to provide fully optimized

solutions. Leaders in the industry have stated that engine design, rather than aircraft design, is the most

critical component in meeting the tightening fuel efficiency standards. Indeed, initial tests of the A320 and

737 replacements have only shown marginal performance improvement.9 Therefore, much of the efficiency

ground may need to be made up in engine design and fall into two categories: retrofits for existing aircraft

and new engines for new production aircraft. Retrofits are more common in military programs and remain

quite rare in commercial applications. Indeed, all major commercial engine OEMs are actually working on

next generation technology to decrease fuel burn and reduce emissions as described below:

Pratt & Whitney is developing a geared turbofan engine, termed the PW1000G, which reportedly

improves fuel efficiency by 10% to 15% while also yielding substantial noise reductions.10

General Electric is developing a new dual rotor high-bypass turbofan called the GEnx, which is

aiming to improve fuel efficiency by 15% over comparable existing models.11

CFM International is developing a high-bypass turbofan named LEAP-X as part of a joint venture

with GE and Snecma. CFM claims an increase in fuel efficiency of 16%, reductions in CO2 emissions

of 16%, and reductions in NOx emissions by 50-60%.12

7 William Freitag, Winglet Program Manager, Commercial Aviation Services; and E. Terry Schulze, Manager, Aerodynamics 8 Department of Resources Energy and Tourism and the National Framework for Energy Efficiency, 2010 9 The 737 Story: Smoke and mirrors obscure 737 and Airbus A320 replacement studies, Guy Norris, February 2006 10 PurePower 100G – Overview, from corporate webpage, Pratt & Whiney 11 The GEnx Aviation Family, from corporate webpage, GE

Historical and projected trend in

composite material in Airbus aircraft

designs

Source: Global Aerospace Market

Outlook and Forecast, Deloitte

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Rolls-Royce is expanding on the Trent line of high bypass turbofan engines for large commercial

aircraft.

3. Improved infrastructure and supply-chain

Airports bring undeniable benefits to society, connecting places, people and products with a range

unmatched by any other mode of transport. Nevertheless, as airports are a huge source of emissions, an

important challenge will arise in the coming years to drastically reduce their emissions. Achieving this goal

means that sustainable development is taken into account from the design stage, in terms of cost, energy,

pollution and of course recycling.

Meanwhile, we will have to resolve the problem of operating and supplying these huge infrastructures,

including heating, ventilation and air-conditioning, electricity, air, water and goods.

ACI Europe developed a program called Airport Carbon Accreditation to encourage and enable airports

to implement best practice carbon and energy management processes and to gain public recognition of

their achievements. These challenges come with opportunities! Indeed, electricity could be produced by

taking advantage of the vast surface area available on parking spots or terminals with solar panel.

Ground operations are another leverage of improvements as taxi operations represent a significant portion

of short haul airline fuel costs: on average 4%. In order to reduce the time that engines operate at idle,

generating a large amount of pollution, automated and electric tractors could be used to bring the aircraft

up to the runway. To meet a similar objective, Safran and Honeywell developed jointly the EGTS (Electric

Green Taxiing System) allowing aircrafts to push back without a tug and then taxi without requiring the use

of the main engines.

On a broader scale, whenever possible, the aerospace

and defense industry tries to reduce its environmental

impacts on different environments (air, water, raw

materials…). Moreover, specific attention is given to

recycling as it is generally cheaper than primary

production and given that the need for raw materials is

increasing year after year.

A huge opportunity is currently arising in the aircraft

recycling business. Indeed, more than 7,000 aircrafts will

be dismantled during the next 20 years, which will require

setting up an industrial process for end of life aircrafts. The

European Project PAMELA (Process for Advanced

Management of End-of-Life Aircraft) coordinated by

Airbus has already given birth to an industrial structure

capable to recycle up to 85% of the aircraft’s

components.

4. Operational improvements

Operational improvements are another major opportunity for fuel and CO2 reductions in the near term.

The different industrial actors have been working for a long time on this topic to develop and implement

more efficient ATM (Air Traffic Management) in order to reduce environmental impacts by optimizing flight

routes. In Europe, the Single European Sky (SESAR) should produce a 70% cut in route extension, while a

similar initiative is ongoing in the other side of the Atlantic with the Next Generation Air Traffic Management

system, which should lead to a 57% reduction in delays. These programs would require investments of $58

billion to be run.13

12 “State of the Art”, from corporate webpage, CFM International 13 A global approach to reducing aviation emissions, IATA, 2009

Military and Civil aircraft boneyard in Arizona, USA

Source: Airliners.net

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In addition to the well-known cut in route expansion, the industry is working on airspace improvements

based on PBN (Performance-Based Navigation) and CDA (Continuous Descent Arrival). Because the time

previously spent at low speed and low altitude in a stair-step flight path, situations where jet engines are

both fuel-hungry and noisy, the noise impact on the ground and the fuel consumption and therefore

emissions are reduced during the approach path.

Thanks to an agreement signed in 2009 between ACI Europe, Canso, Eurocontrol and IATA on CDA, it is now

in place at over 100 European airports, which will save 150,000 tons of fuel and 100 million Euros a year while

reducing CO2 by half a million tons.14

Another source of interest for many airlines is to use engines throttled back to idle during CDA. The only

drawback is that it is very difficult for a pilot to master a continuous descent with engines at idle. Indeed, it

would require integrating the aircraft’s weight in real time, along with atmospheric conditions, and applying

a complex trajectory without allowing oneself the liberty to use a possible go-around. This type of approach

is pushing for full automation as a human pilot would not be able to manage so many variables at once,

every time, without risking an error.15 This is another driver for the development of a white sheet aircraft by

OEM in the long-term.

To go one step further, Europe is investigating 4D contract (Four-dimensional ATM contract) ensuring safe

separation and optimization of all flights, according to global performance criteria. As long as the aircrafts

stay within their assigned 4D volumes (time dimension moving along with a three-dimension airspace tube),

they will be guaranteed conflict-free trajectories. By using optimized and complex flight paths, the 4D

contract is promising to cut routes, save fuel, limit emissions and reduce noise.

Envisioning new business opportunities

Advances in remote sensing have enabled an unprecedented view of

the Earth, bringing a new perspective on environmental issues and

revisions in the Earth sciences, in particular in such fields as

meteorology, agriculture, oceanology, hydrology, geology, forestry,

geography, geodynamics, and many others.16

The scope of Earth observation (EO) missions is too broad to consider all

of them, but we can quote applications related to the atmosphere-

biosphere interactions and exchange processes (biomass, global plant

cover, vegetation conditions, agriculture, forestry, snow cover,

pollution, sediments, hydrology, flood observation, water runoff, erosion)

and Earth climate (long-term climate effects, climate-related

parameters, radiation budget, global energy balance, trace gases of

the atmosphere, global warming effects).

14 Aviation partners to cut 500,000 tons of CO2 a year, ACI Europe, Eurocontrol, 2009 15 Research paths for a viable air transport system in 2050, ONERA

16 Observation of the Earth and its environment. Survey of missions and sensors. Herbert J. Kramer.

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No wonder that people think the world is getting worse and facing an increasing number of

environmental challenges. To tackle these issues, airlines, manufacturers, air navigation service

providers and airports agreed to a pathway to reduce net carbon dioxide emissions through a

cap on emissions from 2020 (Carbon Neutral Growth), and a 50 percent cut in net CO2

emissions by 2050 relative to 2005.

We strongly believe that achieving these targets will require a multi-faceted approach based

on the four-pillar strategy outlined below. The industry will have to make great advances in

various areas such as: sustainable alternative jet fuels, lightweight materials, radical new engine

advances, reduction of auxiliary power unit usage, more efficient flight procedures and greener

airports and operations.

The abundant range of solutions under development by the aerospace and defense industry to

tackle these issues represent a new world of business opportunities.

Satellite images for agriculture in

Maharashtra, India

Source: Space Application Center

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Between now and 2030, the reliance on airborne and space borne platforms to carry out such missions can

be expected to increase drastically with the use of professional UAVs, amateur drones, and DIY (Do-It-

Yourself) satellites. There is an opportunity for the civil aerospace industry to tap into an ever-growing

community of “makers” by providing them with launch opportunities, rapid prototyping kits, services and

platforms for this type of missions.17

Continuous monitoring of the atmosphere, the oceans, the climate, the biosphere, and the agricultural

(crop) land is of vital interest. The value of accurate climate forecasts can be so high in many fields that it

got the attention of all the financial institutions that want to have a competitive edge on the commodities

they are trading, for example. Such an example of the commercial benefits of environmental remote

sensing illustrates well how the environmental issue in the business model of the civil and defense aerospace

industry can lead to a greater number of vertical market opportunities.

According to studies from Euroconsult, Northern Sky Research, and UrtheCast, Earth observation is a $1.5B

market, expected to grow to $4.3B by 2023 with a projected CAGR of 14%. 353 EO satellites are scheduled

over the next 10 years a $36B in value, which represents an 85% increase over the last 10 years. In 2012, 77%

($990M) of the total Earth observation market was defense customers, half of their contribution being from

the U.S. government, but governmental exposure is expected to decrease by 52% by 2020.

1. Future Opportunities for Commercial Remote Sensing Imaging Satellites

The large number of government-funded missions and instruments as well as the diversity and extent of

applications and services related to environmental monitoring give a first impression of vital and dynamic

research on all fronts in the Earth-observing community. Unfortunately, this is the wrong conclusion. For

several years, tight government budgets across the world have led to reduced budgets allocated to such

missions, resulting in drastic redefinitions of programs or cancellations of missions.

The necessities of observation programs and their objectives (or benefits) are increasingly being questioned

and contested by policy makers. Some programs are in a state of turmoil spending a considerable amount

of their resources on continuous, government-directed redefinitions. Many research institutes fight for

renewed sources of funding. In this time of change, it is remarkable to discover how industry has been

adapting itself and gearing up on high-technology Earth observation missions of their own.

High-resolution imaging and systematic data collection seem to be very promising for commercial

endeavors. When campaigns are generally coordinated efforts by a number of institutions, with long lead

times, involving normally a large set of instruments, NewSpace18 startups have found cheaper solutions to

send competitive sensors in orbit. Depending on the scientific objectives, such a campaign may involve

parallel observations from airborne, space borne, and ground-based sensors (stationary, ship-based, truck-

mounted, tower-mounted, moored and floating buoys); which explains that there may be opportunities for

supportive services and new partnerships opportunities for the civil and defense aerospace industry on

many levels.

2. New Strategy for the Civil and Defense Aerospace Industry

The provision of high-resolution imagery for environmental monitoring on a commercial basis by several

companies, along with the need for curated ground segments (control center, ground receiving stations,

data archives, distribution networks, and software) and the operations of these entities represent vast new

opportunities.

In 2030, more and more programs will be venture capital-backed rather than relying on government

funding. The strategic approach already taken by the industry lies on the instruments’ pointing capability for

scheduled instrument operation, permitting the imaging of scattered targets to suit customer requirements.

Industry is betting on a competitive market, whose demand for high-resolution imagery goes far beyond the

scope of environmental issues. There is also a considerable demand for high-resolution imagery by the

defense and intelligence agencies of the world.

NASA issued a decadal survey19 in which they cite among the main challenges faced by EO remote

17 J.H. McElroy, "Earth view · Remote Sensing of the Earth from Space," in 'Monitoring Earth's Ocean, Land, and Atmosphere from Space:

Volume 97 Progress in Astronautics and Aeronautics, AJAA, 1985, pp. 3·44 18

“NewSpace” is a term referring to the emergent private spaceflight industry working to develop low-cost access to space. 19 Earth Science and Applications from Space: National Imperatives for the Next Decade and Beyond. Committee on Earth Science and

Applications from Space: A Community Assessment and Strategy for the Future, National Research Council.

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sensing, the rapidly changing budgetary environment of the public programs and the fact that NASA and

NOAA are not adequately prepared to meet society’s rapidly evolving Earth information needs. Among the

recommendations from the committee, the focus is largely on hyperspectral imaging. It is said that:

NASA should develop the capability to understand the changing patterns of land use due to

intensification of agriculture

Hyperspectral monitoring of land cover is needed

Changes in agricultural soil should be remotely monitored to help farmers increase crop yields, use

better crop varieties, intensify pest control and water management, and decrease the use of

fertilizers

Hyperspectral imaging can benefit the hydrocarbon and mineral-extraction industry, help identify

the reservoirs of land carbon, and several ocean-monitoring missions are envisioned

The U.S. government should work in concert with the private sector on these issues

Hyperspectral remote sensors collect image data simultaneously in dozens or hundreds of narrow, adjacent

spectral bands. These measurements make it possible to derive a continuous spectrum for each image in

order to recognize and map surface materials such as particular types of vegetation or minerals.

Despite the many types of interaction between federal agencies and state and local governments in

obtaining and using remote sensing data, roadblocks are frequently encountered in working with federal

agencies. Regulatory problems or lack of information and insufficient contact between the federal and the

nonfederal public sector are often to blame.20 For example, federal agencies cannot get involved in

disaster recovery or emergency management unless the President formally declares an area as a disaster

zone. Moreover, federal agencies maintain remote sensing resources that could be of considerable benefit

to state or local government agencies for both management and emergency purposes, but information

about these resources can be difficult for state and local officials with little federal or remote sensing

experience to obtain. From these observations, it appears that private companies can take advantage of

the situation by becoming independent providers of environmental data.

3. Challenges faced by the private sector and opportunities by 2030

Commercial providers of satellite or airborne data work closely with the public sector. Yet, the interactions

between private sector firms and their public sector customers can be cumbersome and difficult. For

example, small remote sensing firms have worked with local governments for years, but newly established

national and international satellite data providers encounter problems when forced to negotiate small

contracts with a multiplicity of local government units. State and local government remote sensing is

geographically and institutionally decentralized. There is no central information source that satellite firms

can consult to find out which state and local governments are planning to use remote sensing data or are

issuing RFPs.

To fully incorporate the environmental issue in their business models, the aerospace and defense industry

should work hand in hand with the public sector towards new regulations to prepare 2030 in a context of

shared risks and in order to improve access to environmental data. An approach can be to seek a change

in the formal licensing policy of the satellite imaging companies and seek new licensing deals with public

sector customers.

4. Actively contributing to the growth of an active user community

The private sector can contribute to the growth of an active user community not only by educating them

about the environmental issues at stakes but also directly by offering hands-on workshops to train users to

use the technology. The role that GIS software manufacturers have long played in training individuals to use

GIS, for instance, is an encouraging example of growth for the EO market. By engaging universities or local

communities, the private aerospace industry can stimulate demand from the public and private sector for

remote sensing.

During the next 15 years, the interactions and relationships between the civil and defense aerospace

industry for the production and delivery of satellite remote sensing data can be expected to evolve

through many types. They can include public-private partnerships, redistributor-end user relationships, and

partnerships involving “anchor tenancy” (advance purchases of data from companies developing remote

20 Toward New Partnerships in Remote Sensing: Government, the Private Sector, and Earth Science Research. Steering Committee on

Space Applications and Commercialization, National Research Council

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sensing systems).21 However, in the case of environmental data, scientists have requirements of their own as

any other customers and complications are heightened when the partnership is created to serve the needs

of a third group, like the scientific community. Scientists value the free and open exchange of data, the

capacity to validate scientific results through reanalysis of the data, the calibration, validation, and

verification of satellite data to ensure accuracy, and continuity of the data over multiple points in time. The

intersection of scientific and commercial interests in public-private partnerships can pose challenges to

meet these requirements.

Government acquisition of scientific data for research through an agreement with the private sector

involves more than a simple commercial transaction. By 2030, new regulations on intellectual property and

licensing agreements should be sought after to avoid that the differences between the government and

the private sector complicate negotiations related to the use of privately owned remote sensing data.

Although the business model letting governments be data providers might still be widely used, we provide a

useful framework for considering the institutional arrangements for providing new remote sensing data

through different models.

5. The private sector as an environmental data provider

The model involving the private sector as data provider has been made possible by recent legislation. In this

model, the private sector finances, builds, launches, and operates a satellite, making data available on a

commercial basis for multiple purposes, including research. The government may be a user of the data.

Transactions between scientists and private sector satellite providers may occur on an individual basis

(scientists may use funds from research grants to procure satellite data from aerial remote sensing firms or

commercial satellite remote sensing firms); however, many scientists may not have the funding to purchase

research data from the private sector. However, as the number of private remote sensing satellite data

collectors increases, market forces and competitive pricing could make commercial data more affordable

to scientists. As the use of commercial remote sensing data for scientific research evolves, several issues

must be considered, including data management, data processing, long-term archiving, and intellectual

property and data access.

An example of the public-private sector approach is the French remote sensing satellite, SPOT. Under the

arrangement, the French space agency, CNES, supports the research and development of the satellites,

and a quasi-private company, Spot Image, sells the data commercially.

Strong economic reasons may exist for entering into a public-private partnership, but the benefits of a

successful relationship are not merely financial. On the government side, a public-private partnership can

be a means of providing scientists with access to research data that are otherwise unavailable. In the

private sector, a partnership through which scientists use private sector data can contribute to the

development of new commercial applications of the data.

21 Using Remote Sensing in State and Local Government: Information for Management and Decision Making. Steering Committee on

Space Applications and Commercialization, National Research Council

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By 2030, the environmental issue will have an increasing impact on the business model of the

civil and defense aerospace industry. We have outlined the opportunities and challenges that

existing and future environment-related endeavors can bring to the industry and their

customers’ evolving needs.

It is not yet clear, regarding environmental issues, whether public-private partnerships will

become the model for the future of the civil and defense aerospace industry or are a

temporary arrangement for obtaining data for research. It is clear, however, that existing public-

private partnerships are valuable mechanisms for acquiring data of the ever-changing Earth

that may not otherwise have been available to scientific researchers and many other

stakeholders, that such partnerships have many advantages, and that they can be improved in

the next 15 years.

Despite differences among the partners, clear benefits can be gained through their

collaboration.

10

“The future belongs to those who believe in the beauty of their dreams.”

Eleanor Roosevelt

The aerospace and defense industry players are facing a set of increasingly shared challenges that

require an agile response. Reducing aviation’s impact on citizens and the environment is one of them.

The United Nations’ specialized agency for aviation, ICAO, has played a leading role to address

international aviation emissions by formulating global targets for the sector. A mid-term target to

stabilize net CO2 emissions from aviation from 2020 and a reduction of net carbon emissions by 50% in

2050, compared to 2005 levels have been signed.

The aviation industry is fully supportive of ICAO and has also an important role to play in reducing noise

as well as greenhouse gas emissions, regardless of traffic growth. The vision set out in this document

stresses the need for a global and innovation friendly environment relying on strong, sustainable and

coherent investment in research and innovation.

Even if the industry has already made great advances in technology such as: new composite

lightweight, radical new engines advances and the development of sustainable alternative jet fuels,

we believe that technology alone cannot be the answer. Improved infrastructures, operational and

economic measures are other pieces of the big picture.

Emerging actors from the NewSpace economy represent a competitive risk and a source of

partnership opportunities at the same time. An increasing number of venture capital-backed satellite

missions are already attempted, challenging the legacy business-as-usual model of the civil and

defense aerospace industry. The most important players of the recent years (Planet Labs,

Skybox/Google, UrtheCast, Spire, Planetary Resources, etc) have already made environmental issues

at the heart of their business models, most of them attempting a continuous monitoring of the

changing planet while new non-aerospace stakeholders are showing a vested interest in an on-

demand, exploitable wealth of environmental data. Made possible by Moore’s Law trends in

consumer electronics, more complex and powerful components are already becoming smaller and

more cheaply available, enabling smaller payloads while making new innovation rapidly scalable and

breaking the schedule and cost-cycles that the space industry is infamous for. Between now and 2030,

these companies will have emulated the creation of new ones, embracing a more risk-tolerant

approach while applying the lessons learned from the software industry: releasing early and often,

rapidly iterating, and innovating to stay ahead of the fast-growing opportunities that the remote

sensing of the environment represent.

Finally, we believe that working in partnership with governments, other industries and civil society to

avoid overlapping and potentially conflicting national and regional policies will deliver an efficient

aviation and aerospace sector, fit to meet the needs and provide the services required by the current

and future world economy.

11

References

A global approach to reducing aviation emissions, IATA, 2009

A sustainable flight path towards reducing emissions, UNFCCC Climate Talks, Doha, November 2012 Aviation and the Global Atmosphere, 1999, IPCC Aviation partners to cut 500,000 tons of CO2 a year, ACI Europe, Eurocontrol, 2009 Carburants du Futur, 3AF, 2013 Department of Resources Energy and Tourism and the National Framework for Energy Efficiency, 2010

Earth Science and Applications from Space: National Imperatives for the Next Decade and Beyond.

Committee on Earth Science and Applications from Space: A Community Assessment and Strategy for the

Future, National Research Council "Earth view - Remote Sensing of the Earth from Space," in 'Monitoring Earth's Ocean, Land, and Atmosphere

from Space: Volume 97 Progress in Astronautics and Aeronautics, AJAA, 1985, pp. 3·44, J.H. McElroy

Fourth Assessment Report: Climate Change 2007, IPCC ICAO Environmental Report 2010: Aviation and Climate Change Observation of the Earth and its environment, Survey of missions and sensors, Herbert J. Kramer

Report on Alternative Fuels, IATA, 2007

Research paths for a viable air transport system in 2050, ONERA

The 737 Story: Smoke and mirrors obscure 737 and Airbus A320 replacement studies, Guy Norris, February 2006

Toward New Partnerships In Remote Sensing: Government, the Private Sector, and Earth Science Research.

Steering Committee on Space Applications and Commercialization, National Research Council Using Remote Sensing in State and Local Government: Information for Management and Decision Making.

Steering Committee on Space Applications and Commercialization, National Research Council

List of abreviations

A ATM: Air Traffic Management

C CAGR: Compound Annual Growth Rate

CDA: Continuous Descent Approach

CNES: Centre National d4etudes Spatiales

D DIY: Do It Yourself

E EO: Earth Observation

G GDP: Gross Domestic Product

GIS: Geographic Information System

I IATA: International Air Transport Association

ICAO: International Civil Aviation Organization

IPCC: Intergovernmental Panel on Climate Change

N NASA: National Aeronautics and Space Administration

NOAA: National Oceanic and Atmospheric Administration

O OEM: Original Equipment Manufacturer

P PBN: Performance-Based Navigation

R RFP: Request For Proposal

T TRL: Technology Readiness Level

U UAV: Unmanned Aerial Vehicle