WEBVTT NOTE This file was generated by Descript 00:00:04.972 --> 00:00:06.902 Dallas Campbell: Hello and welcome to Outer Orbit. 00:00:06.992 --> 00:00:10.472 In these little shorter bonus episodes, we're going to be continuing the 00:00:10.482 --> 00:00:15.605 conversation from our main episode, focusing in on a particular topic or 00:00:15.605 --> 00:00:19.565 a point of view and today we're back with Pat Mathewson, who's the Head 00:00:19.565 --> 00:00:26.295 of Business Strategy and Analysis at Astroscale, to explore space economics. 00:00:26.305 --> 00:00:30.195 Examining the growing role that space technology plays in global markets and 00:00:30.195 --> 00:00:34.275 the UK's industrial strategy, discussing how it aligns with space innovation, 00:00:34.275 --> 00:00:38.805 sustainability and the opportunities for the UK to become well, a key 00:00:38.805 --> 00:00:41.298 player in the global space economy. 00:00:41.558 --> 00:00:42.588 Pat, thanks for staying on. 00:00:42.588 --> 00:00:45.618 We've just been talking a lot about sort of space debris and that's one 00:00:45.618 --> 00:00:48.663 of those subjects that, you know, when you're at space conferences, 00:00:48.663 --> 00:00:51.343 there's always big panels about space debris, what to do about space debris. 00:00:51.833 --> 00:00:54.285 But economics is really interesting and it's funny, actually I was just, I 00:00:54.285 --> 00:00:57.595 think I mentioned this a few weeks ago, I've been reading a book by Arthur C. 00:00:57.595 --> 00:01:03.475 Clarke that was written just during Apollo, actually and in it, he was making 00:01:03.475 --> 00:01:05.285 this argument about space economics. 00:01:05.285 --> 00:01:08.511 It's like, if you want to work in space and space to become a thing, it 00:01:08.511 --> 00:01:12.265 doesn't just work to have these big single missions, you have to come up 00:01:12.265 --> 00:01:16.305 with some kind of economic framework to make it work, otherwise nothing 00:01:16.305 --> 00:01:18.765 will happen, you need economics is like really, really important. 00:01:19.015 --> 00:01:21.555 So I just wanted to sort of talk to you about economics, if that's okay, 00:01:21.679 --> 00:01:25.591 and how it works and how important governments are in this and how we should 00:01:25.591 --> 00:01:27.051 be thinking about economics in space. 00:01:27.161 --> 00:01:27.791 Pat Mathews: Absolutely. 00:01:27.801 --> 00:01:30.308 I'm sure you've been to plenty of space conferences or events. 00:01:30.798 --> 00:01:34.898 What is kind of the cardinal sin of the space industry is all of us are already 00:01:34.898 --> 00:01:39.828 converted, preaching to the converted and often these are interesting science 00:01:39.828 --> 00:01:44.560 projects or interesting technology that we think has merit in its own right. 00:01:45.002 --> 00:01:46.842 Dallas Campbell: That's it because we're all science brains, we're like, 00:01:46.872 --> 00:01:47.982 we're going to go and explore here. 00:01:47.992 --> 00:01:50.002 We're going to go back to the moon, we're going to go and do this. 00:01:50.617 --> 00:01:53.717 Pat Mathews: But the problem is the farmer using the satellite based 00:01:53.727 --> 00:01:57.127 technology actually doesn't really care that it comes from space. 00:01:57.317 --> 00:02:00.367 Maybe they do, maybe they're interested in space, but they need it to work. 00:02:00.397 --> 00:02:03.017 And they need it to work at a price point that's useful for them. 00:02:03.517 --> 00:02:07.168 Similarly governments might have an interest in space, there might be 00:02:07.168 --> 00:02:11.738 very persuaded ones, but it's within a larger portfolio of considerations. 00:02:12.118 --> 00:02:15.708 So does space do the job they want it to do for them? 00:02:16.018 --> 00:02:19.158 And that's what we always have to consider and something I think as 00:02:19.198 --> 00:02:22.478 members of the space industry have to continually remind ourselves 00:02:22.478 --> 00:02:26.168 that there is a much larger audience out there that we have to consider. 00:02:26.532 --> 00:02:29.785 Dallas Campbell: Well, give us a, I guess as an idea of, where we are 00:02:29.785 --> 00:02:33.112 with this then, like, I mean, with governments, for example, what should 00:02:33.112 --> 00:02:34.582 the role of governments be in this? 00:02:34.582 --> 00:02:38.127 should we be looking at big national missions or should, it 00:02:38.137 --> 00:02:41.117 be much more disparate and spread out, how should it all work? 00:02:41.232 --> 00:02:44.522 Pat Mathews: So let's go with the UK example for this. 00:02:44.857 --> 00:02:50.152 So the new labor government arrives into power now and faces a general 00:02:50.152 --> 00:02:55.837 economy that is higher inflation, weaker growth and lower labor productivity 00:02:55.887 --> 00:02:57.587 than its peers throughout the G7. 00:02:58.437 --> 00:03:04.137 So it's, in a, Britain is not in a good state right now and the major focus 00:03:04.137 --> 00:03:08.227 of this government is going to be, how do we grow quickly and cheaply? 00:03:08.527 --> 00:03:10.217 Where are these opportunities going to be? 00:03:10.373 --> 00:03:14.343 And in this context, the way we think about space and the way we think about 00:03:14.483 --> 00:03:18.643 national space programs really national missions are going to be super important. 00:03:18.916 --> 00:03:22.576 So governments look at these space has to stand on its own merits 00:03:22.576 --> 00:03:25.596 versus other opportunities to grow, where does it put its money? 00:03:26.026 --> 00:03:29.276 Space has to be an opportunity for the kind of growth that 00:03:29.276 --> 00:03:33.006 government's looking for, the kind of productivity improvements, wage 00:03:33.036 --> 00:03:36.689 premia, or strategic considerations that the government wants to make. 00:03:36.858 --> 00:03:39.041 Dallas Campbell: Why should governments invest in space? 00:03:39.106 --> 00:03:44.106 Pat Mathews: So typically governments invest in space or deep technology for a 00:03:44.106 --> 00:03:48.661 few reasons and largely it has to do with what we call spillovers, what economists 00:03:48.661 --> 00:03:53.811 call spillovers and so say you buy a satellite and I sell a satellite, right? 00:03:53.881 --> 00:03:55.541 That's one transaction that happens. 00:03:55.831 --> 00:03:58.931 You're better off because you wanted to buy a satellite, I'm better off 00:03:58.931 --> 00:04:00.671 because I wanted to sell a satellite. 00:04:00.875 --> 00:04:04.930 But there's all sorts of things that happen around that transaction, that 00:04:04.950 --> 00:04:09.218 you and I don't account for that might be valuable to the government, to 00:04:09.238 --> 00:04:13.128 the public writ large, for example, building that satellite might train 00:04:13.138 --> 00:04:15.128 people and build their skills. 00:04:15.508 --> 00:04:19.454 They may then move other, move over to other companies, then they take 00:04:19.454 --> 00:04:24.214 that expertise to other places, it may sponsor certain industries that 00:04:24.574 --> 00:04:28.794 nationally we think are important or have defense purposes, or help 00:04:28.794 --> 00:04:30.564 achieve other strategic goals. 00:04:30.934 --> 00:04:34.624 So, when governments invest in space, they're typically thinking 00:04:34.744 --> 00:04:38.259 there's all sorts of things that if the private market alone, were to 00:04:38.259 --> 00:04:42.989 provide for it would under provide all these extra spillover benefits. 00:04:43.079 --> 00:04:47.079 It would only sell a few satellites, but if we wanted more satellites 00:04:47.079 --> 00:04:50.399 or more technology to be developed, that would be very valuable. 00:04:50.733 --> 00:04:52.736 Dallas Campbell: I want to go back even further, can you give us an 00:04:52.736 --> 00:04:55.229 idea, I suppose, of the space economy? 00:04:55.389 --> 00:04:57.589 How valuable is the space economy? 00:04:57.773 --> 00:04:59.423 Like how important is it? 00:04:59.846 --> 00:05:00.966 how fast is it growing? 00:05:01.676 --> 00:05:01.946 Pat Mathews: Yeah. 00:05:01.946 --> 00:05:03.996 So there are various projections. 00:05:03.996 --> 00:05:07.492 So it's a hard thing to wrap your arms around because there's so many 00:05:07.492 --> 00:05:10.972 different applications upstream in space, the products that are 00:05:10.972 --> 00:05:14.872 delivered downstream, whether that's, you know, weather calculations, 00:05:14.872 --> 00:05:17.572 or agriculture benefits, or GPS. 00:05:17.902 --> 00:05:22.132 So some ratings by Morgan Stanley have said it's a trillion dollar 00:05:22.132 --> 00:05:27.212 space economy or the new World Economic Forum said it's a 1. 00:05:27.262 --> 00:05:29.632 8 trillion dollar space economy. 00:05:30.062 --> 00:05:32.852 But all these estimates, you know, there's a lot of different 00:05:32.852 --> 00:05:34.152 variables that go into it. 00:05:34.452 --> 00:05:39.112 Safe to say, as we've mentioned in the previous episode, space is intimately 00:05:39.112 --> 00:05:40.922 woven into the fabric of our lives. 00:05:41.272 --> 00:05:43.822 If you're listening to this, you've already used space today. 00:05:44.362 --> 00:05:48.362 You've tapped into the tube, you've had a financial transaction verified by space, 00:05:48.362 --> 00:05:52.252 you've eaten food that's come through a international supply chain via space. 00:05:52.462 --> 00:05:56.812 The weather report came from space and that's if you're in a developed country. 00:05:57.102 --> 00:06:00.632 If you're in a developing country, more than half of the UN Sustainable 00:06:00.642 --> 00:06:04.342 Development Goals are facilitated by space based technology. 00:06:04.524 --> 00:06:09.901 So rather than, I think, the figure that's abstract, know that our lives and our 00:06:09.901 --> 00:06:12.631 livelihoods depend on space technology. 00:06:13.025 --> 00:06:15.991 Dallas Campbell: Why did governments very rarely talk about it other 00:06:15.991 --> 00:06:17.381 than at space conferences? 00:06:17.381 --> 00:06:21.183 If it is so important and it is so important and there's such an underpinning 00:06:21.333 --> 00:06:25.397 thing in everyone's lives, you never, it's never mentioned on the news, when subjects 00:06:25.397 --> 00:06:28.706 of the economy come up on the news, no one's really still talking about space. 00:06:28.706 --> 00:06:30.987 I'm always like baffled as to why not. 00:06:31.262 --> 00:06:32.577 Pat Mathews: Similar reasons of a lot of things. 00:06:32.677 --> 00:06:35.356 We take our standard of living for granted. 00:06:35.380 --> 00:06:39.687 We want to turn our tap on and the water comes out, but we don't think intimately 00:06:39.687 --> 00:06:43.587 about all the innovations that came to make that water flow out of a faucet. 00:06:43.987 --> 00:06:45.353 so there's, a lot behind that. 00:06:45.802 --> 00:06:49.633 It's one of those things in Britain, you know, they now speak about space 00:06:49.633 --> 00:06:51.263 as critical national infrastructure. 00:06:51.748 --> 00:06:55.538 There have been some interesting studies talking about how much the UK would 00:06:55.548 --> 00:06:58.008 lose if GPS was wiped out for a week. 00:06:58.008 --> 00:06:59.608 It's about a billion pounds a day. 00:07:00.045 --> 00:07:03.225 So we're starting to wrap our hands around this, but a lot of people still 00:07:03.245 --> 00:07:07.165 think of space, they close their eyes and they picture the Apollo missions 00:07:07.225 --> 00:07:10.095 and a handful of folks walking on the moon, but they don't realize 00:07:10.595 --> 00:07:14.155 how closely it is tied to their own lives and that includes policymakers. 00:07:14.605 --> 00:07:17.205 Dallas Campbell: What else do you think that governments can do, I 00:07:17.205 --> 00:07:21.082 mean, other than direct investment to increase growth in the space sector? 00:07:21.162 --> 00:07:24.142 Pat Mathews: So I think one of the most interesting examples comes from 00:07:24.242 --> 00:07:30.541 our experience at Astroscale, which is our ELSA D mission, which was the 2001 00:07:30.541 --> 00:07:33.241 demonstration of a debris capture mission. 00:07:33.271 --> 00:07:37.039 We brought our own debris with us and released it and captured it in orbit. 00:07:37.509 --> 00:07:42.169 The reason that mission occurred in the UK was because the UK took a 00:07:42.169 --> 00:07:45.039 very advanced position on licensing. 00:07:45.339 --> 00:07:49.049 So Astroscale wanted to do this mission, we wanted to pioneer this 00:07:49.079 --> 00:07:52.749 technology and we went around to different governments and say, will 00:07:52.749 --> 00:07:55.002 you grant us a license to do this? 00:07:55.162 --> 00:07:58.612 And it was the UK that showed the foresight and leadership to do that. 00:07:58.902 --> 00:08:00.042 Dallas Campbell: Yeah, That's really interesting. 00:08:00.092 --> 00:08:05.012 So leadership, leadership as a concept, as well as things like satellite building, 00:08:05.212 --> 00:08:08.282 which we're really good at in the UK, we kind of punch above our weight, I always 00:08:08.282 --> 00:08:12.472 think, but actually the kind of the legal stuff, the regulatory frameworks, 00:08:12.502 --> 00:08:16.142 the licensing, this is what the UK is good at and we should be pushing. 00:08:16.142 --> 00:08:16.702 Pat Mathews: For sure. 00:08:16.727 --> 00:08:20.517 It's what the UK has a demonstrated history of doing very well. 00:08:21.007 --> 00:08:24.637 If the UK was ever going to have an ambition, it should be make it the 00:08:24.637 --> 00:08:30.552 easiest place in the world to safely license a novel satellite technology 00:08:30.552 --> 00:08:34.092 or novel space mission and this is increasingly important in a time where 00:08:34.422 --> 00:08:36.492 the UK is very fiscally constrained. 00:08:36.542 --> 00:08:39.622 There's not a lot of money to go around, so you have to think of other levers. 00:08:39.632 --> 00:08:44.792 So do you have a policy measure, or in Astroscale's example, or other companies, 00:08:45.142 --> 00:08:49.647 do your investments bring in a lot of foreign direct investment, we call it. 00:08:49.947 --> 00:08:53.714 So the UK invested about 34 million into different Astroscale 00:08:53.714 --> 00:08:57.514 missions to date and that brought in over 70 million from abroad. 00:08:57.984 --> 00:09:02.094 Now imagine if all of our other social programmes, all of our other 00:09:02.094 --> 00:09:05.864 government spending, every pound the government spent, two more came 00:09:05.864 --> 00:09:07.684 in behind it from outside sources. 00:09:08.054 --> 00:09:12.024 So when the government's constrained like that, it has to think a lot about how 00:09:12.024 --> 00:09:16.194 it can crowd in more money from other places to help serve the British people. 00:09:16.410 --> 00:09:18.090 Dallas Campbell: Honestly, when I'm prime minister, Pat, I'm going 00:09:18.090 --> 00:09:19.520 to make you my science minister. 00:09:19.776 --> 00:09:20.796 are you sort of optimistic? 00:09:20.796 --> 00:09:24.143 I always ask guests this about the future and economics is one of those 00:09:24.143 --> 00:09:26.813 things I think we just don't really think about, but it's really, it's so, 00:09:26.823 --> 00:09:28.663 it's so underpinning of everything. 00:09:28.664 --> 00:09:29.301 That's 00:09:29.301 --> 00:09:30.983 Pat Mathews: deeply optimistic about the future. 00:09:31.023 --> 00:09:34.948 I mean, we spoke about this briefly in the other podcast, but, you know, I 00:09:34.948 --> 00:09:40.981 grew up reading sci fi books and this great kind of adventurous, beautiful 00:09:40.991 --> 00:09:45.262 future and what I was interested in is what is the bridge out there? 00:09:45.272 --> 00:09:46.632 How does that actually happen? 00:09:46.642 --> 00:09:48.852 And not just in art and books and science. 00:09:49.092 --> 00:09:50.672 Dallas Campbell: That's a great term, bridge. 00:09:50.899 --> 00:09:52.079 I'm looking for the bridge. 00:09:52.166 --> 00:09:53.456 Pat Mathews: Economics is that bridge. 00:09:53.476 --> 00:09:56.366 You can wish all you want, but you have to understand these things. 00:09:57.061 --> 00:09:58.441 Dallas Campbell: That's really interesting because I always, people 00:09:58.441 --> 00:10:00.981 always say to me, well, why didn't we, you know, why did Apollo end? 00:10:01.011 --> 00:10:02.401 Why didn't we go back to the moon? 00:10:02.401 --> 00:10:05.301 And it was purely, there was no bridge. 00:10:05.571 --> 00:10:07.061 You know, we did this grand mission. 00:10:07.061 --> 00:10:10.001 We went to the moon and did all the things, but there was nothing coming 00:10:10.011 --> 00:10:14.231 back or not enough stuff, not enough science technology coming back in 00:10:14.231 --> 00:10:16.783 return that would make it sustainable. 00:10:16.993 --> 00:10:21.329 Pat Mathews: Absolutely and economics gives you terms and ideas to help 00:10:21.349 --> 00:10:23.609 understand how that bridge might function. 00:10:24.099 --> 00:10:27.009 So when we think about national missions and their value in the 00:10:27.049 --> 00:10:30.979 UK, so there's a couple schools of thought for how government might 00:10:30.979 --> 00:10:32.719 support science or technology. 00:10:33.444 --> 00:10:38.814 They might spread a lot of bets around early stage technology, say in a 00:10:38.814 --> 00:10:42.534 little bit in robotics and a little bit in computer vision and a little 00:10:42.534 --> 00:10:44.944 bit in, artificial intelligence. 00:10:45.234 --> 00:10:48.984 But when it does a national mission and it says all those things have to work 00:10:48.984 --> 00:10:53.974 together to come and combine into a single system that delivers a capability. 00:10:54.279 --> 00:10:56.519 It ensures all those things work together. 00:10:56.959 --> 00:11:00.869 What it does is it solves a coordination problem that delivers a service 00:11:01.079 --> 00:11:02.779 that can then be sold globally. 00:11:03.089 --> 00:11:05.679 So then you establish markets out of those things. 00:11:05.689 --> 00:11:10.879 So late stage investment, trying to pull things together, establish a capability 00:11:10.909 --> 00:11:15.029 and crowd things into something that can be sold on behalf of a government 00:11:15.029 --> 00:11:19.319 or a people is very, very important for it to continue and have momentum 00:11:19.329 --> 00:11:20.889 beyond that initial investment. 00:11:21.399 --> 00:11:25.109 So when we think about, when we think about where economics helps 00:11:25.119 --> 00:11:29.059 build that future, there's a lot of language and concepts that 00:11:29.059 --> 00:11:30.559 are super important to bring in. 00:11:30.896 --> 00:11:31.436 Dallas Campbell: That's great. 00:11:31.536 --> 00:11:32.406 I think we'll leave it there. 00:11:32.806 --> 00:11:36.066 Honestly, it's been so good, it's been really fascinating to talk to you, Pat. 00:11:36.066 --> 00:11:38.056 I mean, these are things that, you know, we don't really think 00:11:38.056 --> 00:11:39.692 about, on a day to day basis. 00:11:40.212 --> 00:11:42.662 You know, economics as a bridge, it's great. 00:11:42.662 --> 00:11:45.549 Pat Mathews: Well, it's genuinely been wonderful, and I mostly, you know, I 00:11:45.549 --> 00:11:49.961 mostly I've been very lucky in that I've gotten to work with much better 00:11:49.961 --> 00:11:54.991 economists than myself, and much more knowledgeable space folks than myself. 00:11:55.081 --> 00:11:59.221 But it's the, I think there's a lot of value in between the subjects. 00:11:59.411 --> 00:12:02.881 Where, you know, if you can just hold a bit and get them to meet, there's 00:12:02.881 --> 00:12:04.261 a lot we can all learn from that. 00:12:04.776 --> 00:12:07.166 Dallas Campbell: That's a nice way of putting it, the value in between subjects. 00:12:07.166 --> 00:12:09.456 It's a bit like the importance of the gaps between your fingers. 00:12:09.456 --> 00:12:09.816 Pat Mathews: Yes. 00:12:10.166 --> 00:12:10.356 Yeah. 00:12:10.566 --> 00:12:13.176 Dallas Campbell: You need that or the gaps between notes and music. 00:12:13.226 --> 00:12:14.336 These are the important things. 00:12:14.346 --> 00:12:14.856 You need the gap. 00:12:14.871 --> 00:12:16.861 Pat Mathews: If you want to hold on to anything, you need them. 00:12:16.971 --> 00:12:17.811 Dallas Campbell: I've loved talking to you, Pat. 00:12:17.811 --> 00:12:18.421 Thank you so much! 00:12:18.421 --> 00:12:19.106 Pat Mathews: It's been very good. 00:12:19.146 --> 00:12:19.986 Thanks very much. 00:12:20.916 --> 00:12:24.436 Dallas Campbell: To hear future episodes of In Orbit, don't forget, subscribe on 00:12:24.436 --> 00:12:29.006 your favourite podcast app, and to find out more about how space is empowering 00:12:29.066 --> 00:12:33.736 industries in between episodes, you can visit the Catapult website, or 00:12:33.776 --> 00:12:35.246 you can join them on social media.