COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council

establishing the Copernicus Programme and repealing Regulation (EU) No 911/2010

TABLE OF CONTENTS

1........... Procedural issues and consultation of interested parties.................................................... 5

1.1........ Identification................................................................................................................... 5

1.2........ Organisation and timing................................................................................................... 5

1.3........ Stakeholders consultation................................................................................................ 5

1.4........ Scrutiny by the Commission Impact Assessment Board................................................... 8

2........... Context.......................................................................................................................... 9

3........... Problem definition......................................................................................................... 12

3.1........ The problem that requires action................................................................................... 12

3.2........ Upgrading the system to routine operational status......................................................... 14

3.3........ Underlying drivers of the problem.................................................................................. 14

3.4........ Establishment of an appropriate governance structure.................................................... 14

3.5........ Who are the most affected groups?............................................................................... 15

3.6........ Foreseen evolution of the problem................................................................................. 16

3.7........ The risk of non-sustainability......................................................................................... 17

3.8........ Does the EU have the right to act?................................................................................ 17

4........... Objectives.................................................................................................................... 19

4.1........ General objectives........................................................................................................ 19

4.2........ Specific Europe 2020 policy objectives......................................................................... 19

4.3........ Operational policy objectives........................................................................................ 20

4.4........ Consistency with and relevance to other EU policies...................................................... 20

4.5........ Synergies with other DG Enterprise programmes........................................................... 21

5........... Options and impact analysis.......................................................................................... 23

5.1........ Different options on budget allocation............................................................................ 23

5.2........ Methodology................................................................................................................ 25

5.3........ Options description....................................................................................................... 27

5.4........ Analysis of impact of options on budget allocation......................................................... 28

5.5........ Cost-Benefit Analysis................................................................................................... 31

5.6........ Key enabling factors and the impact of a reduced budget............................................... 32

5.7........ Expenditure profile considerations................................................................................. 33

5.8........ Conclusion................................................................................................................... 33

6........... Options and impact analysis on Governance.................................................................. 34

6.1........ State of play................................................................................................................. 34

6.2........ Options on programme governance............................................................................... 35

6.2.1..... Option A: Commission in charge of overall coordination and management...................... 35

6.2.2..... Option B: Delegation of the management to an existing European Agency....................... 35

6.2.3..... Option C: Delegation of the coordination and management to the European Space Agency 35

6.2.4..... Option D: Delegation of the management to a new Agency............................................ 35

6.3........ Impact analysis on governance...................................................................................... 35

6.3.1..... Option A: Commission in charge of management........................................................... 35

6.3.2..... Option B: Delegation of the management to an existing European agency........................ 36

6.3.3..... Option C: Delegation of the coordination and management to the European Space Agency 36

6.3.4..... Option D: Delegation of the management to a new agency............................................. 36

6.4........ Decisions on governance............................................................................................... 36

6.5........ Considerations on ownership........................................................................................ 37

7........... Monitoring and Evaluation............................................................................................. 38

7.1........ Evaluation..................................................................................................................... 38

7.2........ Monitoring.................................................................................................................... 41

7.3........ Anti-fraud measures...................................................................................................... 41

1. Procedural issues and consultation of interested parties

1.1. Identification

The European Earth Observation programme Copernicus (originally called GMES, Global Monitoring for Environment and Security), is coordinated by the GMES/Copernicus unit of DG Enterprise and Industry.

1.2. Organisation and timing

This Impact Assessment is foreseen to accompany a legislative proposal for a Regulation of the European Parliament and the Council on the European Earth observation programme (GMES/Copernicus). It is based on a previous version that was elaborated in consultation with an impact assessment steering group that met four times and was consulted on the draft impact assessment. The following DGs were invited to the IASG: ENV, CLIMA, RTD, AGRI, ESTAT, JRC, TAXUD, DEVCO, ECHO, INFSO, ENER, MOVE, EEAS, MARE, REGIO, JUST, HOME, OLAF, BUDG and SG.

This report also builds on previous impact assessment studies, in particular those accompanying the Commission proposal on the GMES/Copernicus programme and its Initial Operations[1] (GIO) and the Commission Communication on the challenges and next steps for the GMES/Copernicus Space component[2]. As the existing Regulation concerns the initial operations period and runs until 2013, there is a need for a new Regulation and for a new impact assessment.

· This is the first impact assessment of GMES/Copernicus that is looking at the programme as a whole, including the three components (space, in situ and services) and at all the six services.

· By now two services (i.e. Emergency Management Service and Land Service) are already operational, while the other four services are close to being operational and more information is available on costs and benefits of those services.

The major study used for this impact assessment is the cost-benefit analysis commissioned by the EC and conducted by SpaceTec Partners in 2013 (see Annex I). This, in turn, builds on Booz & Company’s “Cost- Benefit Analysis for GMES” (CBA[3]) completed in 2011 and on SpaceTec Partners' "Assessing the Economic Value of GMES/Copernicus: European Earth Observation and GMES/Copernicus Downstream Services Market Study" completed in 2012. The executive summaries of these studies are presented in the Annexes V, VI and VII.

1.3. Stakeholders consultation

This impact assessment is based on a continuous consultation of external stakeholders which started early in the GMES/Copernicus development process.

Since the creation of the European Commission's "GMES Bureau" in 2006 a rolling process of stakeholders' consultation has been in place on GMES/Copernicus. This consultation process, launched with the Communication entitled “GMES: from concept to reality”[4], led firstly to the adoption of the 2008 Communication entitled "GMES: we care for a safer Planet"[5]. Further consultation was carried out in order to prepare the Commission proposal for a Regulation on the European Earth monitoring programme (GMES) and its initial operations (2011-2013)[6] and the Communication entitled "Global Monitoring for Environment and Security (GMES): Challenges and Next Steps for the Space Component"[7].

This multiannual consultation process included:

· Thematic workshops with users of Earth observation-based information services;

· Extensive consultation of independent expert groups including "implementation groups" for envisaging the blueprints of future services. The consultation of national GMES/Copernicus coordinators, appointed by their respective Member States, in the framework of the GMES Advisory Council, an expert group with the mandate to provide strategic advice, foster the co-ordination between European and national activities, and facilitate consensus-building in the relevant communities around the development of GMES/Copernicus. This consultation continued in a more structured and formal manner with the creation of the GMES Partners Board[8], an expert group assisting the Commission with an enlarged mandate compared to the Advisory Council. National coordinators were tasked to consult stakeholders at national level and report back at the level of the Partners Board. This process, in full respect of subsidiarity, has been delivered and best practices have been developed and exchanged;

· Workshops and conferences[9], by successive EU Presidencies, dedicated to GMES;

· An Information Day was organised in September 2009 with industry;

· A public consultation on the successor of the Competitiveness and Innovation Programme (CIP) also touched upon innovation in the space and Earth observation sector. Out of the 676 persons who participated at the survey, 75% considered support for satellite applications and other space based services relevant[10]. Results from the impact assessment study on the successor of the Competitiveness and Innovation Programme confirm space as an important sector for future priorities in innovation financing. The study concludes that EU intervention to support the application and adoption of European Satellite Initiatives among non-space sectors should be expanded.

· Regional authorities' point of view, as well as that of local 'final users', has been monitored through FP7 projects such as Graal[11] and DorisNet[12], which also set up Regional Contact Offices both to raise awareness on GMES/Copernicus and to better understand local users' needs. In the same context the network of European regions using space technologies[13] has organised conferences and built publications to spread GMES/Copernicus knowledge at the regional level.

· Since the entry into force of the GMES Regulation in 2010[14], the consultation of Member States and users has continued through the new governance bodies set up by the Regulation itself: the GMES Committee (which has met 10 times from 27th January 2011 till 10th December 2012) and the User Forum[15]. The establishment of a 'User Forum' composed of user representatives has the objective of preparing recommendations concerning the scope, architecture and implementation for each GMES/Copernicus area. The work of these groups culminated in public conferences which are reported in the following table:

Table 1 User Forum Meetings and Thematic Workshops

9th March 2011 || GMES USER FORUM: PREPARATORY WORKSHOP ON LAND MONITORING

17th May 2011 || 1st GMES User Forum

26th September 2011 || GMES USER FORUM PREPARATORY WORKSHOP on ACCESS TO GEOSPATIAL REFERENCE DATA FOR GMES Land Monitoring and other services

27th October 2011 || GMES USER FORUM PREPARATORY WORKSHOP on ATMOSPHERE MONITORING

30th November 2011 || 2nd MEETING OF THE GMES USER FORUM

12th 13th January 2012 || WORKSHOP on GMES Data and Information Policy

25th January 2012 || GMES USER FORUM PREPARATORY WORKSHOP on the GMES MARINE MONITORING SERVICE

7th March 2012 || USERS MEETING on the GMES Initial Operations of the Emergency Management Service - Mapping

16th March 2012 || 3rd MEETING OF THE GMES USER FORUM

11th May 2012 || Expert meeting on the Delegated Act for GMES Data and Information Policy

19th June 2012 || GMES USER FORUM PREPARATORY WORKSHOP ON GMES SECURITY

2nd July 2012 || Expert meeting on the Delegated Act for GMES Data and Information Policy

23rd October 2012 || 4th MEETING OF THE GMES USER FORUM

15th January 2013 || USER FORUM WORKSHOP ON GMES/COPERNICUS EMS Rush mode implementation

22nd March 2013 || 5th MEETING OF THE GMES USER FORUM

Over time, the consultation has confirmed the interest and need for the GMES/Copernicus Programme and is now focusing on different design options, in particular for the GMES/Copernicus services. Stakeholders have indicated that the uninterrupted and guaranteed availability of the information coming from GMES/Copernicus services is the cornerstone for the success of the programme and for its benefits to be fully materialised.

The network of European regions using space technologies has also expressed a need for a long term perspective and a consequent and timely implementation of GMES/Copernicus[16]. The European Association of Remote Sensing Companies recommended that financial support is assured in the multi-annual European Budget to continue the GMES/Copernicus programme[17].

1.4. Scrutiny by the Commission Impact Assessment Board

Two versions of this Impact Assessment have been scrutinised by the Impact Assessment Board (IAB), firstly in October 2011 and secondly in March 2013. Following these submissions the IAB has made a number of suggestions for improvement. Those related to the first submission were taken into account in the re-submitted document and those from the second submission have been responded to in this version.

The first version of the Impact Assessment analysed different options with respect to the overall funding, and with respect to governance issues. Since the European Council has decided on 8 February 2013 that GMES/Copernicus should be financed from within the EU MFF budget and has decided on a maximum budgetary level, the re-submitted Impact Assessment no longer compared different options with respect to budget size and funding sources but rather analysed alternative ways of allocating the budget within the same budgetary envelope[18].

In its opinion of March 2013 on the revised Impact Assessment, the IAB made further suggestions for improvement. This Impact Assessment addresses these suggestions as far as practically possible (and to the extent that they remain relevant). A structured summary of the responses to the latest IAB suggestions for improvement is provided separately.

2. Context

Copernicus is the European Earth observation system, previously called GMES. Earth observation systems provide information about planet Earth’s physical, chemical and biological systems, and hence enable the monitoring of the natural environment. They produce crucial information for a better management of our environment, including the availability of resources, enhanced security of the citizens and evidence-based policies.

As a monitoring system, GMES/Copernicus includes both space based and non-space based facilities, including airborne, seaborne and ground based installations (referred to as "in situ"). Data collected through satellites and in situ infrastructure are processed to enable the provision of information services. This will allow, for example, the more efficient management of natural resources and biodiversity, the monitoring of the state of the oceans and the chemical composition of our atmosphere (important factors for understanding climate change and evaluation of the adaptation actions for policy-making), the response to natural and man-made disasters and ensuring border surveillance in a more effective way.

Since GMES/Copernicus was launched in 1998[19], continuous and substantial efforts have been made by the EU (through Framework Programmes for Research and Development, Preparatory Actions and GMES Initial Operations), the European Space Agency ESA and its Member States, together with contributions from EU Member States and European organisations, for the development of services, the provision of access to space and in situ data, and for the development of a dedicated observation infrastructure.

During the period 2000-2006, the concept of GMES/Copernicus started to be designed and tested. On the EU side, preliminary projects were supported by the 5th and 6th Framework Programmes for Research, Technological Development and Demonstration. The first concrete steps started with the development of the pre-operational GMES fast track services using available funds from the FP6 Space Theme. In parallel, ESA launched its first activities in support of GMES at the Ministerial Council in November 2001 with the Earth Watch programme and its GMES Service Elements activities. At the political level, an important step was achieved with the first Space Council meeting in 2004, a joint and concomitant meeting of the ESA Council at ministerial level and the EU Competitiveness Council.

The period from 2007 to 2013 saw major achievements on GMES architecture, governance and funding. GMES became a reality with the adoption of a Regulation on the Initial Operations. Moreover, more funding was made available from the EU (FP7 Space Programme, Preparatory Actions, and operational funding allocated to the Regulation) and ESA Member States, for the development of pre-operational services and for the continued development of a dedicated space infrastructure (the Sentinels). The launch of the first GMES/Copernicus Sentinel is scheduled for October 2013 while, until the Sentinels are operational, satellite data come only from contributing missions. Some of the services are already generating and disseminating products to users. For example, the Emergency Management Service has been operational since 1st April 2012 and has been activated in the so-called "rush-mode" on 21 occasions, of which 60% concern an EU continental territory. For instance, after the serious earthquake that hit the Italian region of Emilia Romagna, new reference maps were made available, facilitating the work of the emergency teams. Other interventions took place in Bulgaria, France, Germany, Hungary, Italy, Portugal, Romania, Spain and Sweden dealing with floods, forest fires and earthquakes using GMES/Copernicus satellite images.

An Urban Atlas (Land Service product) provides digital mapping for urban planning. Different projects and activities have been undertaken under the supervision of GMES/Copernicus Unit to disseminate knowledge and demonstrate the potential of the programme; six projects have been selected to build demonstrators using GMES/Copernicus and Galileo services combined, exploiting the synergies between the two European programmes which is an area of potential enhanced benefit[20].

The GMES/Copernicus activities paid under the Preparatory Action (PA) and the GMES Initial Operations (GIO) have been evaluated by an independent body[21].

As far as the Preparatory Action is concerned, the evaluator stressed the important role they played in stimulating the formation of user communities especially in the emergency management field. The GMES/Copernicus PA provided the main lesson that obtaining regular user input is critical in adapting services to meet evolving user needs. The PA has helped to encourage greater networking and coordination among user communities in specific fields (e.g. ice monitoring, emergency management) and has promoted the exchange of information between relevant actors.

As far as the GIO is concerned, it has been considered that operations have been managed and implemented efficiently and effectively, under the overall coordination of the GMES/Copernicus Unit. JRC, EEA and ESA have provided the appropriate technical expertise to manage and implement the three components, space, in situ and services. The GIO has achieved the objective of developing two fully operational services within the 3 year programming period, an important outcome at ‘results’ level.

Some lessons learnt from the GIO provide important pointers to GMES future success: the availability of quality and timely reference data, sufficiently well-resourced services and the need to close the data gaps of in situ data. Challenges remain in terms of the lack of harmonization between national reference datasets based on a common methodology and gaps in country coverage.

The evaluator stressed the necessity of raising awareness about GMES/Copernicus and about innovative downstream applications that build on its services. Although good progress has been made in strengthening awareness about GMES/Copernicus services and the potential downstream benefits, further work is needed to encourage user uptake among specific types of users that are less familiar, such as local and regional authorities and some of the New Member States. This process is ongoing, for example through the funding of EMMIA projects and through the different communication activities, such as the European Space Expo. Moreover, as suggested in the evaluation, studies have been recommended to better understand the size and the type of potential downstream markets for GMES/Copernicus, the results of which are already integrated in this Impact Assessment.

In its Communication on the Budget Review, the Commission has acknowledged the major strategic importance of large scale projects, such as GMES[22]. In the context of the Europe 2020 strategy, the Commission has also underlined that the GMES/Copernicus Programme contributes to reaching the Europe 2020 goals: the Flagship initiative n°5 « An industrial policy for the globalisation era » explicitly mentions GMES: « to develop an effective space policy and (…) in particular to deliver (...) GMES »[23].

The Communication towards a space strategy for the European Union that benefits its citizens[24], clearly mentions the importance of GMES/Copernicus for space policy and states: "The current priority is to ensure that it is implemented quickly and effectively, in partnership with the Member States, and that it is fully operational by 2014".

The Competitiveness Council has reaffirmed the need for the Commission to ensure a quick and effective implementation of the GMES/Copernicus programme by 2014, in partnership with the Member States and has recognized the necessity and importance of guaranteeing continuous and long term sustainable access to Earth observation data and Earth monitoring services provided by GMES/Copernicus in order to encourage the development of a European industry of well-diversified downstream services[25]. At its meeting of 31 May 2011, the Competitiveness Council invited the Commission to present by the end of 2011 a proposal for the operations and to clarify the governance of GMES/Copernicus from 2014 onwards. The conclusions[26] of the 31 May 2011 Council meeting recognised the necessity and importance of guaranteeing continuous and long term sustainable access to earth observation data and derived Earth monitoring services provided by GMES/Copernicus.

The European Economic and Social Committee (EESC)[27] supported the Regulation on Earth Observation and its initial implementation (GIO), considering it to be a strategic step in the establishment of a new framework to bring European space policy to maturity.

The European Parliament showed strong support for GMES/Copernicus by voting in favour of the Commission’s GIO proposal in its first reading[28].

A Regulation governing the initial operations of the GMES/Copernicus programme 2011-2013 was adopted in 2010 by the European Parliament and the Council[29]. The GMES/Copernicus programme now has a legal basis that prepares its transition from mere research activity to operational activities.

The European Council decision of the 8th of February 2013 has given to GMES/Copernicus a maximum level of commitments of € 3.786 Mio[30]. This Impact Assessment estimates the Cost-Benefit ratios for different scenarios related to different apportionment of the proposed budget, based on the analysis of the costs and of the social, environmental and economic benefits.

3. Problem definition

3.1. The problem that requires action

Insufficient existing earth observation services

In the last thirty years, substantial R&D efforts in the field of Earth Observation have been made by the EU, the European Space Agency (ESA) and their respective Member States, with a view to developing infrastructure and pre-operational Earth Observation services. However, many of the existing Earth Observation services in Europe are insufficient due to infrastructure gaps and lack of guarantees on their availability in the long term. Data provided through the currently existing services, either do not cover all the parameters needed by policy makers[31], or are not provided on a continuous basis, in particular because the lifetime of the service or the underlying observation infrastructure is limited due to budgetary and/or technical constraints. GMES/Copernicus is conceived to address this potential weakness for the long term.

Continuity of GMES/Copernicus is of paramount importance. Any interruption of GMES/Copernicus services would hamper the harmonization and standardization efforts of the geospatial information products at European level and would thus lead to a decrease of efficiency for inter-country comparison of environment information. Moreover, since many areas of environmental issues – such as climate change mitigation and adaptation policies – require thinking globally and acting locally, discontinuing GMES/Copernicus would reduce dramatically the European added value and capacity to address environmental policies caused by a lack of coordination between national/regional and European / global programmes.

Economic investments at risk

The GMES/Copernicus programme based on the GMES Initial Operation regulation has financed, during the period 2011 – 2013, a range of operational activities. A first step has been made towards the definition of a comprehensive Earth Observation system. However, it is still limited in time (i.e. 2011-2013).

To date, the total investment made by the EU, ESA and its Member States accounts for more than € 3.000 Mio. If GMES/Copernicus were to be discontinued, almost all past investments would be lost, with an additional risk to disrupt national capacities to maintain their investment in space earth observation activities as the EU dimension would no longer provide a political and programmatic framework. It is thus very likely that the situation would go back to fragmented and uncoordinated space activities with remaining gaps, unsolved redundancies, and lack of economies of scale, as they existed before the creation of GMES/Copernicus.

This risk of discontinuity represents a major concern for end-users like public authorities, but also for downstream service providers, as they are unlikely to invest significantly in non-mature, risky markets and will face additional difficulties in raising capital.

Innovation potential at risk

The risk of discontinuity would also imply that R&D investments are not translated into innovation. Therefore the potential to unleash the innovation capacity linked to GMES/Copernicus, which is mainly a service related innovation, will not be exploited. This would be regrettable especially taking into account that the EU innovation policy should be more targeted to the services sector, as different studies show[32].

Autonomous access to reliable, traceable and sustainable information on environment and security is strategic

GMES/Copernicus is expected to provide key tools and products for enabling the definition, implementation and monitoring of EU policies on environment and security. The six thematic services as defined in the GMES/Copernicus Regulation are currently developing more than 400 products to be issued either on a routine basis, either every day (e.g. air quality information), or on demand (e.g. damage assessment maps following a major disaster).

Hence through GMES/Copernicus, the EU has significant influence in international programmes and negotiations such as the three Rio Conventions (Climate Change, Desertification and Biodiversity), post-Kyoto Treaty, GEO, CEOS, GCOS, and in bilateral discussions on space activities.

Finally, GMES/Copernicus gives the EU an autonomous capacity on access to information. Without it, the EU would have to rely on non-European (e.g. US) satellites or international sources of information (e.g. International Charter, international conventions), or even on uncoordinated sources from its Member States for the implementation of its policies.

Employment at risk

Satellite applications systems are the main source of income for the European space industry (€ 3.100 Mio), and are the main domain of exports (with € 1.130 Mio).[33] One of the two most significant segments in terms of income is Earth Observation (e.g. GMES/Copernicus Sentinels). Currently, Earth Observation systems account for around 30% of the total income for the European space industry. Besides this direct impact on industry sales, GMES/Copernicus has a significant impact on the competitiveness and the profitability of the European space manufacturing industry. Export and trade vastly depend on the relative competitive position of the sector.

Recent studies[34] have explored the impact of GMES/Copernicus data availability on downstream markets development and have added the figures of downstream sector employment to the figures of jobs development in the space related sectors. Considering the GMES/Copernicus contribution along the Space value chain, GMES/Copernicus can be seen as a driving force for creating highly skilled job opportunities and can have indirect effects on the wider economy by 2030.

Downstream: Maintaining and creating more than 9.000 direct jobs cumulatively, provided that full data continuity is assured for GMES/Copernicus in the long term, and the EO market potential is realised, with enabling factors in place.

Upstream and Midstream: Maintaining and creating 2.740 direct jobs under the GMES/Copernicus funding scenario of full data continuity.

An aggregate of 11.900 direct jobs will be created and maintained across the entire GMES/Copernicus and EO value chain.

A high-level analysis of potential economic multiplier effects (based on Oxford Economics’ Space industry multipliers, provided by the European Commission) suggests that more than 36.000 indirect jobs could be maintained and created, yielding an overall employment impact of approximately 48.000 jobs in Europe by 2030.

3.2. Upgrading the system to routine operational status

The GIO (GMES Initial Operation) Regulation will be valid until the end of 2013. In the meantime a new budget has been proposed by the European Council for GMES, which is entering its operational phase from the start of 2014 under the new name of Copernicus. These changes require a new Regulation which will propose decisions on, among other topics, the issues of programme governance, of ownership of the infrastructure and of budget apportionment between the different components. In addition, a Delegated Act on Copernicus Data and Information Policy, to be applicable to the operational phase, has been prepared and enshrines the principle of full, open and free-of-charge data access for all users. It is crucial that this ‘upgrade’ of the programme results in a smooth transition to the new operational phase, especially from the perspective of existing and potential users, with the highest level of continuity and the efficient apportionment of the budget, as well as efficient governance choices.

3.3. Underlying drivers of the problem

As shown above, stakeholders widely agree that a public intervention in basic operational services is a prerequisite for wide-ranging operational services to emerge. Without such intervention operational services useful for policy makers and others will not become available.

The market fails in providing the operational services without public intervention. This is mainly due to intrinsic high fixed costs, while at the same time returns generated by selling data to public authorities or commercial players are risky and hard to estimate. This makes the investment not sustainable for the private sector given the very long time span required to reach the break-even point of the investment[35].

Although the overall benefits from the programme are estimated to largely exceed the costs, they are partly of a public nature linked for instance to monitoring climate change or to deforestation[36]. Moreover the benefits coming from downstream market development require the continuous availability of GMES/Copernicus data to incentivize private investments in the sector. For these reasons, the continuation of the Programme has to be assured and the most appropriate budget allocation and apportionment approach has to be adopted. This impact assessment will therefore look into different options regarding alternative allocations of the budget foreseen by the European Council for GMES/Copernicus.

3.4. Establishment of an appropriate governance structure

The shifting from a research phase to an operational phase requires re-thinking of the governance structure. The reasons are manifold: research projects are smaller in terms of budget and objectives, limited in duration and conceived as prototypes of what the whole Copernicus structure could look like. It is exactly building on those experiences, and taking into account internal financial and human resource constraints, that the GMES Unit has been analysing different options and proposing the most efficient governance framework for Copernicus. Final decisions on governance in the proposed Copernicus Regulation have taken account of discussions with other interested Commission Services and in stakeholder meetings such as the User Forum and GMES Committee. Past evaluations and personal experiences have been taken into account in choosing the “delegation solution”. The main reasons that lead to this decision are the increasing number of management tasks and the need for specialised personnel to address the specific services development: it is exactly to avoid duplication that the Regulation proposes the delegation of tasks to external actors who already have the required skills and organisation. In addition, certain management responsibilities could exploit existing Commission resources or could be covered by seconded experts. Thus, through a combination of outsourcing and exploiting internal resources, the effective capacity of the GMES Unit for managing the programme will be appropriately increased.

3.5. Who are the most affected groups?

GMES/Copernicus is a user-driven programme, thus requiring the continuous, effective involvement of users, particularly regarding the definition and validation of service requirements, aiming at providing information services in the field of environment and security. Up to now, during the build-up phase, the user consultation process has been based on interaction with Member States (GMES Advisory Committee, Partners Board, GMES Committee), on recommendations from the User Forum, and took stock from outcomes of the demonstration activities financed through the FP7 programme, conclusions of specific studies, results of dedicated workshops and dialogues with stakeholders, and reports from the Implementation Groups.

GMES/Copernicus services are based on more than 30 applications with over 400 products. The user community is large and diverse, spanning from international stakeholders to European citizens. The most affected groups include:

– At European level, Commission services (13 DGs) are already using or are planning to use GMES/Copernicus products, e.g. ECHO for emergency management services, ENV for land, marine and atmosphere monitoring services, AGRI for agri-environmental monitoring, MOVE for oil spill and ice monitoring, MARE for ocean monitoring and forecasting, REGIO for land use and CLIMA for forest monitoring and climate change mitigation and adaptation.

– EU agencies are also important users and actors (EEA, EMSA, FRONTEX, EUSC…), as well as the European External Action Service (EEAS), intergovernmental European agencies (ECMWF, EUMETSAT, EDA, ESA), and European programmes, associations and networks (EMEP[37], EUMETNET, Eurogeographic, Eurogeosurvey, OSPAR, HELCOM…).

– At international level, GMES/Copernicus is developing relationships with GEO partners, UN agencies (FAO, WFP, UNEP, UNOSAT…), NGOs, and international research programmes (ESSP[38] with DIVERSITAS, IGBP, WCRP, IHDP) since the scientific community is an important user of GMES/Copernicus data and services;

– National Authorities (Ministries of Environment, Transport, Interior, Agriculture, Energy, Fisheries, Land Management, Maritime Affairs …) and Public Local Authorities (e.g. in urban planning issues), but also specific entities such as Civil Protection Authorities and Risk Control Agencies.

– A wide range of users in the industry framework (space manufacturing sector and related operations, service provision, data production and dissemination sector, development of value added services in the downstream sector), and ultimately European citizens who will use the final products.

As far as the downstream sectors are considered, a specific analysis has already identified the more promising ones and estimated the potential turnover. An estimate of the European GMES/Copernicus’ downstream market potential has been performed and is included in the Cost-Benefit Analysis below.

3.6. Foreseen evolution of the problem

The challenge is to ensure the continuity and evolution after 2013 of appropriately designed services to meet the users' needs. This continuity of services presupposes the continuity and evolution of GMES/Copernicus infrastructure providing the necessary data. Without good policy management, the "raison d'être" of the Programme is put into question, as users will only rely on GMES/Copernicus if a sustained flow of data is ensured. Without appropriate funding given to services, the continuity will be exposed at risk.

In this context, and given the € 3.786 Mio that are allocated to GMES/Copernicus inside the Multiannual Financial Framework for 2014-2020, the baseline scenario for this impact assessment is that the above budget would be spent on GMES/Copernicus, and include financing the following actions:

– The uninterrupted provision and adaptation of GMES/Copernicus services according to evolving user needs. The earth Observation (EO) downstream evolution will largely depend on the continuous input of information produced in the framework of GMES/Copernicus services.

– The exploitation of GMES/Copernicus infrastructure currently developed specifically for GMES/Copernicus (the prototypes of the Sentinel missions),

– The recurrent units (i.e. identical copies of existing prototypes needed e.g. to increase the frequency of observations and extend the time span of data provision with a relatively low investment compared to the prototypes);

– The renewal of space infrastructure developed specifically for GMES/Copernicus (taking into consideration the long design and construction lead times for satellites (8–10 years), including decisions on the second generation of Sentinels);

– The user friendly access to space data from contributing missions (i.e. existing or new space infrastructure at national or international level which is not developed specifically for GMES/Copernicus) and co-ordination activities in the European Earth observation sector;

– A contribution for the coordination of the in situ component.

– It should be recalled that the long-term GMES/Copernicus funding approach should be developed in a modular way. This means that new expansions in the scope of GMES/Copernicus services and every new evolution of GMES/Copernicus will be assessed against the criteria of cost efficiency, user needs and EU policy interests.

– However, while the overall budget has been decided, the allocation of the budget among the three main components of GMES/Copernicus (space infrastructure, in situ infrastructure and services) is not predetermined by the decision. This impact assessment will therefore compare three alternative options, without regarding any one of them as the baseline. The impacts in terms of costs and benefits will be analysed in absolute and relative terms for all three scenarios.

3.7. The risk of non-sustainability

The primary area of risk for both the downstream exploitation of the Copernicus Services and also the upstream sector is the inherent uncertainty in the funding model, based, as it is, on the European Union’s MFF funding strategy. This currently guarantees sustainability of the Copernicus programme only for 7 years. Hence, as time passes and the guarantee period diminishes so the various actors whose businesses depend on the programme might become less confident about the future. Unless this loss of confidence over time can be mitigated, several negative impacts may emerge, including the likelihood that the profile of benefits revealed by the Cost Benefit Analyses may turn out to be over-optimistic. In order to mitigate these risks the Commission should take steps at an appropriately early stage (perhaps starting at the mid-term review) to instil confidence by firmly and publicly stating its commitment to securing funding for Copernicus beyond 2020. In addition the Commission should develop and publish a long-term strategy for Copernicus, including its funding, so that the confidence of those with vested interests in the programme can be maximised.

3.8. Does the EU have the right to act?

The legal basis for a European Earth observation programme (GMES/Copernicus) is Article 189 of the TFEU, which allows the EU to act. Article 2 of the Regulation 911/2010 on the European Earth Monitoring programme (GMES) and its initial operations establishing the GMES/Copernicus Programme already lists activities included in the programme. Moreover, the delivery of GMES/Copernicus is a strategic objective of Europe 2020.

Responsibility for funding the exploitation and the renewal of space infrastructure developed with EU and intergovernmental funds cannot be optimally achieved by individual Member States because of the costs incurred. In the field of space-based observation for operational meteorology, European States have pooled their resources to develop and exploit meteorological satellites in the framework of the European Organisation for the Exploitation of Meteorological Satellites (EUMETSAT). European States also developed demonstrators of environmental satellites either through ESA or through national space agencies. They could not, however, find a way to co-operate with regard to the funding of sustained operational programmes in the field of environmental monitoring similar to that for meteorology. The need for continuing such observations is becoming critical, considering the increasing political pressure on public authorities to take informed decisions in the field of environment, security and climate change and the need to respect international agreements.

For the services with a pan-European (or even global) coverage, Member States cannot sufficiently achieve the objectives of the proposed action, as the inputs from different Member States have to be aggregated at European level. The provision of other services (e.g. emergency maps or thematic land monitoring maps of a more limited geographical scope) can be better achieved by the EU for two reasons. First, a more coherent and centralised management of input data, from space based or in situ sensors will allow for economies of scale. Secondly, an uncoordinated provision of Earth observation services at Member State level would lead to duplications and would render the monitoring of the implementation of EU environmental legislation on the basis of transparent and objective criteria difficult or even impossible. If information produced at Member State level is not comparable, it will not be possible for the Commission to ascertain whether environmental legislation has been implemented correctly in all Member States. Moreover, action at European level will create economies of scale leading to a better value for public money.

The action proposed for the operational phase of GMES/Copernicus does not replace existing services at national or regional level, but rather complements and optimises them, coordinates them or ensures their continuity. EU institutions and policy makers will be among the main users and beneficiaries of the GMES/Copernicus information and services; moreover the provision of GMES/Copernicus data at a European level is necessary to build trust in the final users and to foster investment in downstream applications.

4. Objectives

4.1. General objectives

The over-arching objectives of defining, financing, establishing and operating a GMES/Copernicus, long-term operational programme of activities as described in the proposed Regulation on establishing the European Earth Observation Programme (Copernicus) are to actively address the problems described in Section 3 above.

By forming a key element of the EU’s Space Policy, an overall objective of GMES/Copernicus can be defined as contributing to reaching the following Europe 2020 goals by creating:

« a more resource efficient, greener economy »

« a more competitive economy »

« an economy based on knowledge »

« an economy based on innovation »

« a high-employment economy »

« economic, social and territorial cohesion ».

· The GMES/Copernicus services aim to enable public policy makers in particular to:

– prepare national, European, and international legislation, for instance in the field of environmental matters, including climate change;

– monitor the implementation of this legislation;

– access comprehensive and accurate information concerning safety and security matters (e.g. for border surveillance, civil protection activities, …)[39].

– Additional objectives concern the need of assuring continuous data provision to foster downstream markets development.

These objectives will be pursued in the context of international cooperation, while at the same time guaranteeing a minimum level of autonomy of the EU when it comes to accessing crucial information to inform its policy decisions.

4.2. Specific Europe 2020 policy objectives

Delivering GMES/Copernicus and Galileo Programme is one of the objectives stated in Europe 2020 strategy. GMES/Copernicus aims to contribute to the Europe 2020 objectives in the following ways:

« a more resource efficient, greener economy », i.e. in particular the preservation and management of environmental resources and ecosystems and biodiversity (knowledge of biomass and land use, monitoring of oil spills…); achieving efficiency gains as a result of better enforcement of EU policies (environment, agriculture, maritime policies…).

« a more competitive economy », as a flagship on industrial and space policies, GMES/Copernicus aims to foster the competitiveness of EU industry and its technological edge in space (manufacturing) and beyond (services + applications); it specifically aims to create business potential for SMEs by boosting innovation (SMEs represented half of the downstream sector in 2009).

« an economy based on knowledge », GMES/Copernicus aims to contribute to a better understanding of global challenges (e.g. climate change, tropical deforestation, desertification, land degradation and emergency preparedness); it supports the development of research/science by the provision of critical data.

« an economy based on innovation », GMES/Copernicus allows the emergence of highly innovative downstream services (e.g. for the management of the environment, security, meteorology, civil protection and risk management); it aims to create partnerships between research and business communities and can set benchmarks for transfer of research and development into business;

« a high-employment economy », GMES/Copernicus creates additional potential for new jobs (e.g. in the satellite manufacturing industry and in the downstream sector[40]) by boosting additional demand for highly-skilled workers and fostering new markets development.

« economic, social and territorial cohesion », i.e. need for new ground infrastructure in particular in the EU-12; creating new business potential for SMEs in all EU Member States (also for services and applications in countries with weaker industrial base, thanks to the full and open data access principle of GMES/Copernicus). GMES/Copernicus will give an impetus to those countries lacking behind in land or emergency services and will therefore contribute to the objective of an increased cohesion among the Member States. GMES/Copernicus services are by definition pan-European and respond to European requirements.

4.3. Operational policy objectives

The decision of the European Council integrates GMES/Copernicus inside the MFF, setting the ceiling for the maximum level of commitments to € 3.786 Mio from 2014 to 2020. The operational objective now is to allocate that amount in the most cost-effective way when developing the different components of GMES/Copernicus. On governance, and based on principles of good governance, the operational objective is to separate supervision, management and technical implementation.

4.4. Consistency with and relevance to other EU policies

In the operational phase GMES/Copernicus will be able to deliver information services to policy makers, public authorities, businesses and European citizens. This means that GMES/Copernicus, as an EU autonomous source of information, aims to support all relevant Union policies, instruments and actions, where understanding the way environmental changes affect our planet is paramount.

Examples of GMES/Copernicus contribution to other EU policies include following:

· International cooperation policies: extending GMES/Copernicus services to Africa represents a concrete contribution to EU development policies. Satellite Earth Observation, for instance, enables the monitoring of crop conditions during the agriculture season and the development of Food Security Early Warning System for at-risk regions worldwide. In addition some applications of GMES/Copernicus could provide policy makers with information on natural resources in Africa.

· Transport policy: by optimising ship routing GMES/Copernicus Marine service could minimise fuel consumption and emissions.

· Environmental policies: the GMES/Copernicus services provide systematic or periodic information at various scales which are necessary for monitoring on a continuous basis the state of the Marine, Atmosphere and Land environment. In this context environmental images collected through GMES/Copernicus could provide the basis to monitor the targets of the new European biodiversity strategy, as announced in May 2011, or as a tool to monitor the efficient use of resources such a wood, water, minerals, land, air (quality) and many others at European and global scale

· Humanitarian aid: GMES/Copernicus services also play an important role in emergency response activities inside and outside the EU, providing up-to-date information which is crucial for decision makers, operation planners and field teams.

· Energy: GMES/Copernicus can provide Europe with a reliable source of information, monitoring nuclear proliferation or decommissioning of nuclear sites and protecting vital infrastructure such as pipelines.

· Regional policy: at Pan-EU level GMES/Copernicus Land Service provides harmonised land cover and land cover change products. This information is essential for land use and urban policies purposes.

· Climate change policy: There are several GMES/Copernicus services that touch upon climate-related issues such as forest monitoring and land carbon information, monitoring sea and ice level, analysis of greenhouse gases and fluxes.

· Internal affairs and security: GMES/Copernicus can contribute to border surveillance and maritime surveillance. In this framework since 2008, DG ENTR and DG HOME have established a close cooperation.

· Agriculture: Agri-environment monitoring could contribute to the improvement of the timely and accurate monitoring of agricultural land use state and its changes at European, national and regional levels by providing common methodologies and indicators covering various temporal, spatial and thematic scales. The common agriculture policy could use GMES/Copernicus in order to monitor the ‘set-aside’ policy.

· Marine related policies: GMES/Copernicus allows understanding the ocean, its dynamic processes and its impact on climate change. Applications in this domain include: Maritime Security, Oil Spill, Marine Resources management, Climate Change, Seasonal Forecasts, Coastal Activities, Ice Surveys and Water Quality.

4.5. Synergies with other DG Enterprise programmes

There are clear synergies between Copernicus and other DG Enterprise programmes, which have been exploited in the past and may be exploited in the future. The main Programmes to be mentioned are the space elements of Horizon2020[41] and COSME (Competitiveness of enterprises and SMEs). The fact that Copernicus is now entering its operational phase does not mean that it will not need research activities also in the future. The Copernicus services build on the results of FP7 projects (e.g.: MACC II, MyOcean2, etc) and there will be a similar need from the Space projects of the framework programme Horizon 2020 to provide further guidance and inspiration – obtained through multi-national European projects – to help in the onward development of Copernicus, especially regarding the less mature elements (e.g. the Climate Change Service) and the future evolution (e.g. through emerging technologies). Other examples include contributions to the provision of better tools to access and analyse the data, to studying innovative downstream applications of Copernicus data and services and to support the establishment of Space Surveillance and Tracking capability. As far as COSME is concerned, in the past there has been cooperation especially for the European Mobile and Mobility Industries Alliance (EMMIA) projects: a European Commission initiative which fosters the cooperation between industries, especially SMEs, and regional authorities in the field of mobility and mobile services. A specific call[42] was made to help entrepreneurs who want to build downstream applications using Copernicus and Galileo and new initiatives are foreseen for the future.

·

5. Options and impact analysis

Preamble

The whole of Annex I and the large majority of this Section, while based on material from a Specific Contract with Space Tec Partners under the Framework Service Contract 89/PP/ENT/2011 – LOT 3, has been edited and updated to reflect the Commission's proposal for a Regulation establishing the Copernicus programme.

This section presents the key results from the overall impact analysis. A more comprehensive description, along with details of the analysis methodology, is presented in Annex I. It is important to note that the most up-to-date version of the so-called “Injection Paper” (the deliverable from the Specific Contract) has been used in this updated Impact Assessment (and is included as Annex I). The most significant difference from previous version is the assumption that the level of funding for Copernicus in the period 2021-2030 will be the same as that applicable during the current MFF. This change was requested and allows an analysis that is not complicated by guesses of future budget variability which are necessarily based on mere speculation. It does not impact in any way the opinions expressed by the IAB on the previous submission.

Preliminary considerations

All options in this impact assessment share some common elements that are described below.

Infrastructure at Member State level

GMES/Copernicus is partly based on an existing infrastructure at Member State level, of so-called "in situ" components (airborne or ground-based sensors) and space components (so-called "contributing missions"). The starting assumption is that Member States will continue to invest in their space and in situ infrastructure for their own purposes, as they have done in the past.

Principle of modularity

The modularity principle refers to the possible differentiated implementation of GMES/Copernicus based on budget constraints. The principle applies both to the services and to the infrastructure investment. For instance, if under one of the options, the available budget would be still somewhat lower than what is foreseen in the option, the services can be slightly reconfigured and still be provided with a reduced portfolio of products. Therefore the GMES/Copernicus programme has no systemic risk of cost overrun.

5.1. Different options on budget allocation

Given the amount of funding decided by the European Council for the Copernicus programme, the three scenarios (options) described in this section examine the effects of varying the amount apportioned to the three main components: space infrastructure, contribution to the in situ infrastructure and the financing of the Services. The analysis emphasises the trade-off between investments in space infrastructure and services, while keeping the expenditure on the in situ stable, given the inherent nature of this component (primarily reliant on national investments).

The logic applied in designing the three cost breakdown scenarios in this analysis proceeds as follows:

Previous studies have identified minimum annual budget levels for the three components, below which realisation of benefits falls rapidly.

The first scenario represents the maximum investment in the Service component.

The remaining two scenarios adjust the levels of the Space component upwards, and apportion the remaining budget to the Services component.

The analysis of the possible funding scenarios shows that investment should be proportionally higher than previously envisaged in the service component, including their initial set up and the continuous improvement of the specific services. Nonetheless, a large investment in the space component still remains necessary since this will provide the EC with the essential source of sustained, independent and comprehensive Earth Observation data, whose exploitation is underpinned by a well-defined full and open Data Policy. This is of crucial importance when it comes to private business development: a stable and transnational regulatory framework is one of the enabling factors for private entrepreneurs to invest to develop businesses with Copernicus data.

For the space component, ESA has proposed a revised strategy for Sentinel satellite development and deployment which reflects the reduction in the available budget but which responds to the essential need for continuity of space-based observations. This re-planning includes three major changes when compared with the previously agreed Copernicus Long-Term Scenario (LTS) as follows:

Recurrent –C and –D units of all the Sentinels are introduced. These provide for data continuity and have the benefit of the economies of scale at the expense of postponing the evolution of observational needs. The development of these units will take place during the MFF period, although their eventual launch and operations will occur post 2020;

Related to the above point, the development of the Sentinel-NG (Next Generation) satellites is deferred beyond 2020;

Less funds than previously foreseen will be committed to securing access to data from contributing missions (i.e. satellites other than the Sentinels). The impact of this decision is mitigated by the fact that data from the Sentinels will become available progressively over time, obviating the continued need/importance of some third-party data sets.

This approach clearly puts the onus on the Services and the downstream applications to exercise their creativity and expertise to the maximum extent to continually find new and novel ways of making the most benefit from the existing data while, at the same time, to expend effort in capturing the changing requirements that must be consolidated for the planning of future (post 2020) developments with confidence.

This approach results in the revised Sentinel development/deployment baseline described in the diagram below.

5.2. Methodology

In 2011 Booz & Company was commissioned by the European Commission to undertake a Cost-Benefit Analysis (CBA) of the GMES programme. The main focus of this study was the assessment of four broad funding levels for GMES and its operational services. The evaluation of benefits was mainly based on the role EO infrastructure plays in supporting the implementation of government policies aimed at better managing the environment and issues related to security. Based on this assumption, the study analysed the value of information GMES provides to support policy action and resource management across the EU and further afield.

In order to establish these benefits (and how GMES may reduce various costs), a literature review of the economic value of information, combined with interviews and desktop research, enabled the development of assumptions around the incremental benefit from better EO information. Four options were provided for analysis under the cost-benefit assessment:

Option A (Baseline Option with no on-going commitment to replace infrastructure or investing significantly in services);

Option B (Baseline Option Extended, but still with no on-going commitment to replace infrastructure over the longer term and invest significantly in services);

Option C (Partial Continuity, with commitment to provide Sentinel infrastructure and invest considerably in services, with limited support to ensuring continuity of data from Contributing Missions); and

Option D (Full Continuity with commitment to provide Sentinel infrastructure and enhanced support for the continuity of data from Contributing Mission with full investment in services).

The quantification of benefits was based on an approach that attributes to GMES an incremental improvement in outcomes, e.g. measured as a change in baseline environmental damage costs. This recognised that the attainment of particular outcomes in each benefit area is a result of multiple factors, of which the contribution by GMES is only one part. The extent of GMES contribution was taken into account in the analysis for each benefit area.

A new study was commissioned from SpaceTec Partners to re-examine the original CBA in the light of potential budgetary and governance choices. The methodology adopted in the Booz CBA was based on a Copernicus “full continuity” scenario (referred to as Option D), and then applying progressive degradation to each of the other options in relation to this scenario. This scenario was used as the reference case in the new SpaceTec Partners study. The “progressive degradation” principle is applied in the present analysis to establish the baseline for analysing the changes in the allocation of funding amongst the different main cost areas, and the like-for-like estimation of benefits, subject to the understanding that there are limits to the validity of this principle, such as minimum and upper thresholds on benefit realisation.

The CBA regards each of its options “as being discrete” (Booz CBA, p. 99), meaning that the benefits do not grow linearly in relation to the level of investment, but are the outcome of different configurations of the Space, Service and In Situ components within the options. In other words, a step function is at work, with threshold boundaries separating unconnected plateaux of benefit escalation.

This is particularly true in the case of the Space component; since the Sentinels are deployed in units, there are limits as to what can be achieved with specific levels of funding. Minor deviations around these step changes do not serve to alter the benefit profile in a significant way. Whilst this proposition is not readily observable in the Booz CBA because of the proportionally large gap between the funding levels of each option, it is recognised that in each case, a step change in commitment (and hence, benefits) has taken place.

In order to refine the analysis, the SpaceTec 2013 study examined the extent to which benefits scale in relation to the level of funding allocated between the Space and Service components, in particular. This analysis allows a comparison of the three scenarios analysed in this Impact Assessment, that all share the same budgetary envelope. The following assumptions underpin the present analysis as regards the scaling of benefits:

Investment in the Space component is a necessary, but insufficient condition for the realisation of benefits.

In order for benefits to arise, parallel investments must be made in Services.

A step change in benefits occurs once investment in Space reaches a certain threshold. Beyond this threshold:

Additional investment in Space does not bring about linear increases in benefits

Step-changes in benefits are contingent on additional investment in Services.

Benefits linked to investments in services are more linear, with incremental benefits possible through service improvement, extension to scope, and the development of new services. These nonetheless remain dependent on upgrades or enhancements to the underlying Space infrastructure for larger step changes, accompanied by more major service-supporting developments such as improved access to data and the enabling of the downstream sector[43].

While the in situ component also plays a role in the scaling of benefits, it is not shown here as the Space-Services relationship is considered to have the most impact on the present analysis.

5.3. Options description

The Cost-Benefit Analysis will analyse the three scenarios described below:

Service Delivery Pull

This scenario foresees a relatively large share of the available budget being used to finance the provision of services. This scenario allows for a level of funding for the Space component in line with previous studies (namely the Booz CBA option B). The realisation of additional, programme-wide benefits rests on the development of the Service component and on the implementation of its enabling factors. In this scenario, the deployment of the Space component is assumed to follow a serial approach (i.e. the Sentinel series of satellites are deployed in series). This scenario would therefore try to combine the minimum investment in space infrastructure with the maximum possible financial allocation to services.

Intermediate

The “Intermediate” scenario increases the investments in the Space component with respect to the first, while the Services component is reduced proportionally. In this scenario, as in the previous one, the deployment of the Space component is assumed to follow a serial approach. This scenario illustrates the impact of adding emphasis to the evolution in contrast to that attributable to the impact of evolving services.

Technology Driven

This scenario foresees the highest possible investment in the Space component while the Services component would be reduced to the bare minimum. This scenario would be completely driven by advances in Space-based remote sensing technology but would not necessarily embrace the priorities elaborated by the users of the Services.

5.4. Analysis of impact of options on budget allocation

The budgetary allocation assumptions for each scenario, given a fixed total budget, and the benefits for each of the scenarios are presented in the tables below:

Table 2 - Cost Distribution by Scenario (Annual Averages)

|| || I - Service Delivery Pull || II - Intermediate || III - Technology Driven ||

|| || Space || in situ || Services || Space || in situ || Services || Space || in situ || Services || Annual average

TOTAL 2014-2030 || € Mio || 400 || 22 || 119 || 422 || 22 || 97 || 438 || 22 || 81 || 541

% || 74% || 4% || 22% || 78% || 4% || 18% || 81% || 4% || 15% ||

Source: SpaceTec Partners 2013.

Table 3 - Benefit Simulation by Scenario

|| 2014-2020 || 2021-2030 || TOTAL (2014-2030) || Integrated contribution to European GDP || Integrated Benefit Cost Ratio (BCR)

|| Cumulative, € Bn || % || Ratio

I - Service Delivery Pull || 6,3 || 23,0 || 29,4 || 0,164% || 3,30

II - Intermediate || 6,1 || 22,1 || 28,2 || 0,157% || 3,17

III - Technology Driven || 5,9 || 20,8 || 26,7 || 0,149% || 3,01

Source: SpaceTec Partners 2013.

Downstream Impact

In addition to the direct benefit analysis, the economic impacts associated with the Earth Observation and GMES/Copernicus downstream market have been estimated by scenario, as illustrated in the chart below.

Figure 1 - Projected Downstream Turnover By Scenario (2014-2030, € Bn)

Source: SpaceTec Partners 2013.

Impacts on employment

The impact on employment has been estimated for each scenario, considering direct and indirect employment separately. The effects of different funding inputs have been modelled according to the cost scaling parameters outlined in Annex I.

Table 4 - Employment Impact by Scenario

(US: Upstream, MS: Midstream, DS: Downstream, DE: Direct Employment, IE: Indirect Employment, T: Total)

(Figures rounded up to nearest 10)

|| || I - Service Delivery Pull || II - Intermediate || III - Technology Driven

|| || DE || IE || T || DE || IE || T || DE || IE || T

|| || Number of jobs created / maintained by 2030

TOTAL(2014-2030) || US || 2.030 || 5.270 || 7.300 || 2.140 || 5.550 || 7.690 || 2.220 || 5.770 || 7.980

MS || 710 || 1.830 || 2.540 || 680 || 1.750 || 2.420 || 650 || 1.690 || 2.340

DS || 7.170 || 29.340 || 38.510 || 8.710 || 27.850 || 36.550 || 8.460 || 27.070 || 35.530

T || 11.900 || 36.440 || 48.330 || 11.510 || 35.150 || 46.650 || 11.330 || 34.520 || 45.840

Source: SpaceTec Partners 2013.

Economic, Environmental and Social Benefits

The benefits of each scenario have been categorised according to their economic, environmental, and social dimensions, both qualitatively and quantitatively.

Table 5 - Summary of Economic, Environmental and Social Benefits (Quantitative)

Benefit Categories || Values || I - Service Delivery Pull || II - Intermediate || III - Technology Driven

Economic || Total Space Turnover (2014-2030) || € Mio || 8.002 || 8.306 || 8.542

Total Downstream Turnover (2030) || 1.034 || 981 || 954

Combined Δ Scen. I || % || 0% || -2% || -4%

Environmental || Total (2014-2030) || € Mio || 17.611 || 17.005 || 16.158

Δ Scen. I || % || 0% || -3% || -5%

Social || Total (2014-2030) || € Mio || 11.585 || 11.045 || 10.415

Employment Impact[44] (2030) || # || 48.330 || 46.650 || 45.840

Δ Scen. I (Benefits) || % || 0% || -5% || -10%

Δ Scen. I (Employment) || % || 0% || -4% || -5%

In order to complement the analysis being carried out by Booz, the SpaceTec study used an additional model, the FeliX model, a system dynamics model and benefit simulator, which takes into account the complex relationships between natural and socio-economic systems has been developed by SpaceTec. The model forecasts benefits that are in the order of magnitude of € 21.700 Mio cumulatively by 2020 and € 220.000 Mio by 2030 (undiscounted), substantially higher (~8 times, in the long term) than the ‘static’ benefit projections of the present study. This is due to the enlarged scope of the FeliX model, and its broad assumptions of underlying infrastructure (namely GEOSS[45], to which Copernicus is expected to constitute the EU’s major contribution). The comparison with the FeliX output serves to highlight the strong potential for higher-order magnitudes of benefits when Copernicus is viewed as part of a broader system of systems. The figures used in this impact assessment are therefore considered to be conservative estimates.

Figure 2 - Potential Range of Benefit Scaling Based on FeliX Model

Source: SpaceTec Partners 2013.

5.5. Cost-Benefit Analysis

This section summarises the results of the scenario analysis presented in this chapter.

Table 6 - Integrated Impact Simulation by Scenario (Undiscounted)

|| || || I - Service Delivery Pull || II - Intermediate || III - Technology Driven

2014-2020 || Cumulative Benefits || € Bn || 6,3 || 6,1 || 5,9

2021-2030 || Cumulative Benefits || 23,0 || 22,1 || 10,8

TOTAL (2014-2030) || Cumulative Benefits || 29,4 || 28,2 || 26,7

Downstream Impact in 2030 || 1,03 || 0,98 || 0,95

Integrated contribution to European GDP || % || 0,164% || 0,157% || 0,149%

Integrated BCR || ratio || 3,30 || 3,17 || 3,01

Source: SpaceTec Partners 2013.

The analysis has examined three scenarios with different proportional allocations of budget amongst Space, in situ and Services. The scenario “Service Delivery Pull” has the highest benefit potential, at € 29,4 Bn cumulatively over the 2014-2030 period, and the highest integrated Benefit Cost Ration (BCR) at 3,30.

Scenario I: Service Delivery Pull

The larger benefits projection in this scenario is due to the increase in investment in services, coupled with the serialised deployment of the Space component, conferring the necessary longevity and programme commitment for the development of the downstream sector.

Overall, this scenario represents an interesting mix of investments. It capitalises on the marginally increased investment in Services against a “legacy” level of Space component investment. The programme’s continuity is assured until 2030. The level of funding for the Space component should include some allowance for preparatory activities leading into developing the next generation of Sentinels. It is assumed also that ESA will continue to fund, to a large extent, all the preparation and pre-development activities for the future generation satellites, plus the development of the prototype units.

The impact of funding services at this level leads to a higher, relative level of benefits, given the strong coupling between services and benefits. The impact should be ensured by an appropriate expansion of the Copernicus services, by ensuring access from everywhere in Europe to the services and data, by enforcing adequate standards for products, by supporting the expansion of the downstream sector and sustaining the user community in the access to and adoption of new products, services.

Scenario II: Intermediate

This scenario represents less of an increase in benefits with respect to “Service Delivery Pull”, due to the higher spending in Space at the expense of Services.

The objectives and extent of the investment in Services remain substantially the same as in the previous scenario, only to a slightly lesser degree.

The Space component has additional margin for preparing the next generation, but part of this extra should be dedicated to ensuring wider circulation of data to different user categories (science, commercial, downstream, regional, etc.). This amount does not allow a change in philosophy from the serial deployment of Sentinels. As in the previous one, it relies heavily on the Contributing Missions.

Scenario III: Technology Driven

This scenario presents a significant drop in overall benefits with respect to the previous ones, as the transfer of funding from the Services to the Space component does not compensate for the loss in benefits.

This scenario does not offer many reasons to be recommended. It poses questions about the use of the extra funding for Space (for example, starting a different family of Sentinels, or adding C/D units) and does not sufficiently encourage the expansion of services and their availability to a much wider user community.

All projected benefits in this analysis are contingent on the implementation of a set of enabling factors, including regulatory and market development actions, summarised in Annex I.

5.6. Key enabling factors and the impact of a reduced budget

The initial phase has mainly been based on research projects, which have also led to the birth of the first two operational services (i.e. Land and Emergency Management). On the basis of this experience, the GMES Unit is now presenting the proposal for the Regulation with the aim of putting in place the framework necessary for the theoretical benefits to be realised. In particular, sustained data availability, quality and continuity, underpinned by a data policy that ensures full, open and free-of-charge access, combined with a strategy ensuring historic data preservation, appear to be necessary factors for the private sector to invest in the use of Copernicus data to develop new businesses and also for the public sector to have the information they need to support their policies and their monitoring roles. The budget apportionment and the governance choices will particularly affect the quality and the continuity of data provision.

To some extent, the reduction in the budget could be foreseen as a likely outcome of the MFF debate and so, in anticipation of the decision of Council, analyses of several possible funding scenarios were conducted with the aim of mitigating the impact of an eventual reduced budget. The key drivers were to ensure the continuity of space-based observational inputs (necessitating some re-planning of the Sentinel developments and deployments) and to preserve the effectiveness of the services – and hence maximising their downstream impact – by assigning as much of the remaining budget as possible to them. The decision on the apportionment of the available budget to the three component areas is informed by the analyses and reflects the most favourable scenario analysed.

The proposal had to be adjusted to take account of the fact that the MFF cut the initial amount by over 2 Billion EUR. In order to preserve service delivery, the Commission had to cut expenditure for new developments of the space component during the MFF period. ESA will take over responsibility for the development of the next generation of the Sentinels. Moreover, the introduction of the next generation will be postponed. Instead, the D-Units of the Sentinels will be procured as explained in section 5.1 of the Impact Assessment. This will maintain the quality and continuity of the satellite data whilst postponing the introduction of a more modern generation of Sentinels to the second part of the next decade.

5.7. Expenditure profile considerations

The Commission shall establish a multi-annual plan for the implementation of the Copernicus programme. In order to optimise the implementation, a mix of annual and multi-annual work programmes will be adopted. Moreover, such is the nature of the transition to routine operations, it is also envisaged that the allocation of funds during the MFF period shall reflect the ‘ramping up’ characteristic of the various Copernicus Services over time as well as reflecting the expenditure needs resulting from the revised satellite development and deployment. Hence an adjusted yearly allocation of the budget, constrained by the overall envelope, will be needed. This is anticipated to result in a peak of expenditure in 2017 and 2018. Administrative expenditure (including human resources) is expected to remain at a constant level throughout the MFF period.

The analysis of benefits performed by Space Tech Partners did not attempt to reflect the year on year variability in expenditure but rather assumed a constant average spend each year. This was decided due to the uncertainties currently present in the spending profile combined with the likely marginal impact that might be expected (since benefits are generally shown as cumulative).

5.8. Conclusion

The above Cost-Benefit Analysis shows that within the budget foreseen by the European Council, Scenario I (Service Delivery Pull) would have the highest benefits and therefore would be most cost-effective scenario.

6. Options and impact analysis on Governance

Preamble

The content of this section has, to some extent, been overtaken by internal discussions and other events since it was first presented in the IA. However, since not all questions have yet been completely addressed, it has been retained in this version for the sake of completeness.

6.1. State of play

· The objective for governance is to assure that all aspects ranging from policy supervision to technical implementation are clearly fulfilled by mandated organisations:

– The policy supervision and overall coordination consists in defining the policy objectives, the high level orientations and content of the programme, the associated budget requirements, the main organisational and architecture principles, and the overall guidelines for programme implementation. It also covers the coordination of funding commitments from stakeholders.

– Management: the managing authority follows the political guidelines and is in charge of the management of budgets for the implementation of tasks. It prepares and implements the work programmes and supervises the implementation of tasks. It is responsible for the preparation of administrative arrangements (e.g. calls, grants, delegations…) to the entities who will be in charge of the technical implementation of the tasks;

– Technical coordination: is usually carried out by the management authority, but in some cases, the latter may delegate some tasks to a body, e.g. preparation of contracts and Service Level Agreements, monitoring of the task implementation, certification of products and services, consolidation of user and service requirements.

– The technical implementation is ensured by the operating entities (industrial companies, networks of centres…) in charge of specific tasks (construction of satellites, delivery of services). The assignment of this responsibility will follow a competitive approach (e.g. Calls for Expressions of Interest) to ensure transparency and fairness.

· Under the current GMES/Copernicus programme[46], the Commission is in charge of the political supervision and overall coordination of the GMES/Copernicus programme, including management of the services, and of the EU budget[47]. The technical coordination of some activities, including budget management for the implementation of tasks, are outsourced to external entities such as ESA for the space component, or the European Environment Agency (EEA) for the in situ component.

· The responsibility for the technical implementation of the services must, on the one hand, take into account the invaluable experiences gained during the GIO (and earlier) phases while, on the other hand, pay due respect to the principles of open competition. The latter concern should take account of the presence of the open competition that underpinned the awarding of the FP7 funded pre-cursor services as well as ensuring that principles of open competition are embraced by the coordinating entities of the services through the selection of partnership arrangements.

· The topic of governance has been discussed at different occasions. Stakeholders agree that the GMES/Copernicus programme is very complex and the technical implementation could be done by an external agency, enabling the European Commission to focus on political supervision.

6.2. Options on programme governance

6.2.1. Option A: Commission in charge of overall coordination and management

Under this option, the Commission would remain in charge of the political supervision and the overall coordination of the programme, including the management of tasks. The technical coordination of space infrastructure would be outsourced to competent bodies, such as ESA and EUMETSAT, and agencies such as EEA and ECMWF for the in situ component and/or the technical implementation of appropriate services. The Commission would take decisions regarding the daily management of the programme and would also implement the budget.

6.2.2. Option B: Delegation of the management to an existing European Agency

The Commission would remain in charge of the overall coordination and political supervision of the programme but not of its management. Management activities, such as the budget implementation, would be delegated to an external entity/Agency (or to several entities) who already possess the appropriate skills. The Commission would remain in charge of relationships with partners and users.

6.2.3. Option C: Delegation of the coordination and management to the European Space Agency

The Commission would no longer be in charge of the programme. The overall coordination, including budget management and implementation of tasks, would be delegated to ESA, subject to the appropriate amendment of the constituent acts or to functional arrangements. The Commission would no longer be in charge of the political supervision of the programme and of relationships with partners and users.

6.2.4. Option D: Delegation of the management to a new Agency

Compared to the options described above, a new Agency would be set up for the programme management of GMES/Copernicus and the implementation of the corresponding budget. This new agency could be an EU Agency or an international one.

6.3. Impact analysis on governance

6.3.1. Option A: Commission in charge of management

The advantage of this option is that the current set up would not be disrupted. With the outsourcing of tasks, the impact on the EU resources would be limited. However, the Commission would remain involved in the direct management of the operational phase of the programme, including the budget implementation, while it should concentrate on its core business, namely the political supervision of the programme.

6.3.2. Option B: Delegation of the management to an existing European agency

The Commission would play a political role of supervision and coordination. The daily management would be entrusted to entities more suited to this role with more specialized staff, under the control of the Commission. The delegating tasks to an Agency would still have an impact on EU resources. This option is in full respect with the separation principle between supervision and management. Moreover, operational efficiencies could be created if synergies with other programmes can be realised.

6.3.3. Option C: Delegation of the coordination and management to the European Space Agency

The management would be entrusted to an entity with experience in this role and the impact on EU resources would be minimised. However, the Commission would lose political control over the programme and its influence in defining the objectives and requirements. In addition, the implementation of and access to GMES/Copernicus infrastructure and services may be reduced to a few Member States willing to continue their investments into GMES/Copernicus. GMES/Copernicus would then risk becoming a technology pushed programme instead of a user driven one. The management of an operational programme such as GMES/Copernicus could require amendments to the ESA Convention, which could be difficult to obtain and require a long time (ESA currently being a research and development Agency, ESA Member States may not necessarily be prepared to amend its statute). It should also be clear that ESA is a space agency whereas GMES/Copernicus has a large part of activities that go beyond launching satellites. This may mean that under ESA management the services and in situ component of GMES/Copernicus are liable to receive a lower level of focus.

6.3.4. Option D: Delegation of the management to a new agency

In this option, the Commission would play a political role of supervision/coordination. The daily management would be entrusted to entities more suited to this role, under the control of the Commission. Opting for an international organisation would not impact EU resources. This option is however likely to make the institutional landscape more complex with one new entity. Synergies would not be maximised, with potential risks for the implementation of the programme. In addition, creating a new entity could prove either too complex and long (e.g. international organisation) or incompatible with the EU policy of not creating new agencies. A new Agency would require substantial additional resources.

6.4. Decisions on governance

Various options for the governance of Copernicus are described above. An assessment of these options and other factors has led to the following governance proposal.

General considerations:

The Commission, assisted by a dedicated Copernicus Committee, should have the overall responsibility for the Copernicus programme; it should define its priorities and objectives, in accordance with the Copernicus Regulation, ensure the overall coordination and supervision of the programme;

The implementation of the programme should be delegated to entities with the appropriate expertise. The Commission should rely, whenever possible, on the capacities of competent Union agencies.

Specific considerations:

The Commission shall entrust to ESA the development tasks of the space component;

The Commission shall entrust the operational tasks of the space component to ESA and to EUMETSAT in accordance with their respective mandates;

The Commission may entrust the operational tasks of the in-situ component to the operators of the services;

The Commission shall award responsibility for the operation of the services to agencies who respond to a call for expressions of interest and who satisfy the Commission as regards their capabilities, experience and financial/operational capacity and suitability.

6.5. Considerations on ownership

Decisions on ownership of the Sentinels cannot be considered in isolation of decisions on governance. EU ownership of infrastructure, developed specifically for GMES/Copernicus (in particular space infrastructure), would result in direct control of the assets by the EU.

With ownership of assets comes responsibility for associated risks and liabilities. For the Sentinel satellites, which represent the largest value assets, the highest risks occur in relation to their launch and early in-orbit life and also in respect of their potential susceptibility to damage from space debris, along with the implementation of the end-of-life scenario (i.e. de-orbiting). By deferring the transfer of ownership until after the satellites have been launched and successfully completed their respective in-orbit validation (IOV) tests, the first risk category is all but eliminated. Furthermore, the proposed Copernicus Regulation specifically identifies an operational activity delegating the physical preservation of the satellites to the agencies responsible for their routine operations, thereby addressing the second risk category.

While the risk from ownership is low, it has to be noted that EU should not forego the benefits of ownership stemming from such a major investment. In fact, it would be inappropriate for the EU to invest some 3.8 Bn EUR without acquiring ownership of the space infrastructure and all the data and information thereby produced. Thus, it is suggested that the EU should assume ownership of the tangible and non-tangible assets of the programme.

Co-ownership of GMES/Copernicus assets by different public entities could be more costly than EU ownership only. This could lead to a governance structure for GMES/Copernicus that is too complex and potentially to higher costs.

In a data purchase scheme, the EU would not own infrastructure, but would acquire ownership or exclusive licences for parts or all data collected by one or more satellites. The advantage of this option would be that the EU would avoid direct involvement in the complex technical operations of the space infrastructure, which, however, could also mean that the EU cannot influence strategic decisions taken by the infrastructure owner. The inconvenience would be that the data policy would largely depend on the commercial strategy of the seller. Moreover, given the present structure of the satellite industry, the EU could find itself paying a large portion of the funds to satellite data providers of third countries, thus supporting the development of the satellite industry of those countries rather than investing in the development of the European satellite industry.

7. Monitoring and Evaluation

7.1. Evaluation

On-going evaluation will take place through the User Forum. An ex-post external evaluation will be organised in 2014, at the end of initial operational activities, and also it is planned that there shall be a mid-term evaluation of the operational programme in 2017.

Three main indicator types will be considered:

Sectoral performance indicators – e.g. context, trend and strategic indicators

Policy indicators – setting out the link between objectives, the achievement of policy goals and the criteria needed to measures progress towards these.

Programme indicators linked to the implementation of specific activities – indicators that measure progress towards the achievement of goals linked to activities within specific Copernicus' services, and those few that can be aggregated.

The GMES unit has already undertaken some work to develop sectoral performance indicators. These are important indirect proxies of the programme’s success, but are contextual in nature. It is important that the indicator framework builds on these existing indicators.

An overview of those suggested is provided below:

Upstream indictors, relating to space infrastructure and services such as satellite application systems, launcher systems, scientific systems and ground systems, as well as the manufacturing and development of earth-based infrastructure (sensors etc...);

Midstream indicators relating to the production, distribution, dissemination of data and data processing; and

Downstream indicators on the use of EO services and products both by the public sector and the commercial one, focussing on the opportunities for spin-off companies.

These indicators provide a useful framework to develop a better understanding of the enabling factors that will lead to the development of EO products and services. They are also interrelated, with the development of downstream applications and services having knock-on upstream effects by potentially creating an increase in demand for data and enhancing the commercial viability of space infrastructure.

At this stage, monitoring the development of downstream services can mainly be achieved indirectly through sectoral performance monitoring. In the future, it may be possible through evaluation and improved monitoring processes within Copernicus full operations to capture the direct longer term results and impacts of the development of downstream, measured in terms of their contribution to employment and growth.

There is also a need to develop indicators to assess programme outcomes, measured in terms of outputs and results. A study requested by the Commission to CSES advocated including a small number of indicators for the overall services (e.g. service user uptake, financial implementation), and then some supporting indicators relevant to each of the two services, EMS-Mapping and the GIO land.

Examples of quantitative indicators are: the number of registered users, the number and volume of data downloads, the number of service activations, the number of data products used, etc. Qualitative indictors will also provide some interesting information that can be used as indicators. These could include ease of access to reference data, harmonisation for available data between Member States etc.

The indicator framework should include specific indicators relevant to each service so as to provide monitoring information about the extent of usage of data products, the purpose for which these are being used and the uptake of specific services. It would also be useful to incorporate indicators in the framework that can be aggregated across Copernicus services to complement service-specific ones.

Within this broad set of indicators, the main types of indicators that should be taken into account are:

• Inputs – indicators that monitor the level of resource requirement to implement a particular policy measure, initiative or action. • Outputs – indicators that monitor immediate outcomes and are useful for internal management purposes. • Results – indicators to assess medium-term, intermediate policy outcomes. It should also reflect the intervention logic of the specific objective under which measures / initiatives have been supported. • Impacts – longer-term indicators that relate to the achievement of high-level global objectives and their effects (e.g. economic and employment impacts, impacts on innovation, technology transfer and progress towards strengthening space industrial competitiveness).

A set of performance indicators is proposed in the table below. Although these are based only on an analysis of the fast-track services implemented under the GIO, they could nevertheless be considered as a template for the assessment of future services.

Some of the performance indicators relate to monitoring internal processes e.g. Length of time to produce reference maps and some to user uptake and exploitation. Context indicators relating to sectoral performance of the upstream and downstream EO industry are also included in the table.

Table 7: Proposed indicators

Performance indicators Service –specific (EMS) || No. of service activations (i) Rush Mode and (ii) Non-Rush Mode Sub-indicators for internal management purposes: by type (earthquake, explosions, fire, floods) || Organisation responsible for collecting data || Output

No. of Member States triggering the service - EMS-Rush mode - EMS-Non-rush mode - EFAS || DG ECHO/ MIC || Output

No. of downloads of EMS-Mapping data products || DG ECHO/ MIC || Output

No. of downloads of EFAS products || JRC || Output

Length of time to produce: - Reference maps - Delineation maps - Grading maps Baseline (i) from point of service activation (ii) from point of reception of raw data || Service contractor || Output

Length of time between the production of maps and their dissemination to end-users || DG ECHO/ MIC || Output

No. of users of EMS-Mapping data products - Rush mode - Non-rush mode - E