Source: EURLEX
Language: en
Format: md

**EN**

# **EN EN**

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 28.10.2009
SEC(2009) 1441

**COMMISSION STAFF WORKING DOCUMENT**

## **_SUMMARY OF THE IMPACT ASSESSMENT_**

_**Accompanying document to the the**_

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN**

**PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL**
**COMMITTEE AND THE COMMITTEE OF THE REGIONS**

**‘Global Monitoring for Environment and Security (GMES):**
**Challenges and Next Steps for the Space Component’**

{COM(2009) 589 final}
{SEC(2009) 1439}
{SEC(2009) 1440}

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## **SUMMARY OF THE IMPACT ASSESSMENT**

**1.** **I** **NTRODUCTION**

This Impact Assessment accompanies a Commission Communication on the Space
Component of Global Monitoring for Environment and Security (GMES). It was drawn up in
consultation with a steering group of Commission services, following a wide-ranging
stakeholder consultation carried out by the GMES Bureau. The present report has been
analysed by the European Commission’s Impact Assessment Board and amended accordingly.

GMES is an Earth observation capacity that makes it possible to manage natural resources
more efficiently, and to monitor biodiversity and the state of the oceans and the chemical
composition of our atmosphere — important factors for climate change —, to respond better
to natural and man-made disasters and to improve border surveillance.

GMES comprises a service component and an observation infrastructure component, the latter
consisting of a space infrastructure and in situ infrastructure. Benefits arise from the service
component, which in turn depends on the observation data coming from the infrastructure.
GMES should therefore be viewed as a complete system. While the 2008 Commission
Communication ‘GMES: we care for a safer planet’ [1] addressed GMES as a whole, this
present Communication zooms in on the Space component, with the aim of: (i) facilitating the
co-decision procedure on the Commission proposal for a GMES programme and its initial
operations in 2011-2013 [2] and (ii) preparing the ground for the decisions covering the next
financial framework (post-2013).

Space data constitute a key input into the GMES service component. If the flow of space data
is interrupted or cut off, certain services cannot be provided. The thematic areas within the
GMES service component will rely on access to data from existing Earth observation
satellites owned by third parties [3] and space infrastructure developed specifically for GMES.
As the EU does not want to duplicate existing capacities in Europe, it was examined to which
extent the user requirements compiled by the EU could not be met by existing or planned
infrastructure.

This gap analysis helped to define the content of the ESA GMES Space Component
Programme, to which the EU contributes financially, and which is concerned with developing
satellite missions known as ‘the Sentinels’. The first constellations of Sentinels are currently
being developed by ESA and include seven satellites (the first two units of Sentinel 1 to 3, the
first two units of Sentinel 4 and the Sentinel 5 precursor) plus two instruments to be flown
onboard EUMETSAT satellites.

1 COM(2008) 748, 11.12.2008.
2 COM(2009) 223, 20.5.2009.
3 Including EU Member States, intergovernmental organisations such as ESA and EUMETSAT, non-EU
countries and private entities.

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**2.** **P** **ROBLEM DEFINITION**

Once developed, the space infrastructure will have to be exploited and, in due course,
renewed with a view to collecting the environmental data for the GMES service component.
The problem addressed here is therefore how the following can be managed and financed:

    - the exploitation of the initial constellations of Sentinels developed by ESA, after the end of
the development phase, and

    - renewing the Sentinels, many of which have a life span of around seven years, in parallel
to the exploitation mentioned above,with a view to the long-term continuity of data
collection.

In its proposal for a Regulation on the GMES Programme and its initial operations 20112013 [4], the Commission proposed that the overall financial envelope for GMES initial
operations should be EUR 107 million, 40 million of which being for exploiting the Space
component.

The financing and management of the exploitation of the Sentinels has been discussed in a
number of documents, including the Commission Communication ‘Global monitoring for
Environment and Security (GMES): we care for a safer planet’ [5] . While it is expected that a
future EU Programme should contribute to the sustainability of the space infrastructure,
notably in terms of in-orbit availability and operations, no binding decisions on EU funding of
Sentinels exploitation was possible, as the period in question goes beyond the current
financial framework. A decision on financing the space component therefore needs to be
prepared soon, as part of work on the next multiannual financial framework.

ESA Member States have made it clear that the Sentinel infrastructure represents their
contribution to the GMES Space Component and that their financial effort is made on the
assumption that the EU will take over responsibility for the exploitation and renewal over
time of an equivalent infrastructure, under EU funding. [6] The same position has been taken
consistently by several EU Member States in the GMES Advisory Council, an experts’ group
assisting the Commission in GMES development. It is thus unlikely that, in the absence of EU
commitment, an organisation other than the EU would assume responsibility for the GSC
beyond 2013. Consequently, the GMES service component as currently conceived would not
be viable [7] .

**3.** **A** **NALYSIS OF SUBSIDIARITY**

The EU contribution to the exploitation and, eventually, renewing the space infrastructure
developed at European level is fully in line with the subsidiarity principle, for the following
reason. The responsibility for the exploitation and possibly the renewal of space infrastructure
developed with EU and intergovernmental funds cannot be sufficiently achieved by the

4 COM(2009) 223, 20.5.2009.
5 COM(2008) 748, 12.11.2008.
6 See e.g. the minutes of the 198th meeting of the ESA Council on 15 February 2008, p. 4, and the
minutes of the 203rd meeting of the ESA Council on 15 and 16 October 2008, p. 6.
7 See also recital 12 of the proposal for a GMES Regulation. Although it would be possible to provide
some services only on the basis of _in situ_ data, or data from missions other than the Sentinels, such
services would not be comparable any more to the thematic areas in the GMES service component.

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Member States because of the costs incurred. It is precisely for this reason that in the field of
space-based observation for operational meteorology, European States have pooled their
resources to develop and exploit meteorological satellites under the auspices of the European
Organisation for the Exploitation of Meteorological Satellites (EUMETSAT). European
States have also developed demonstrator environmental satellites either through ESA or
through national space agencies. They found no way, though, of cooperating on the funding of
sustained operational environmental monitoring programmes similar to those in meteorology.
Nonetheless the need for such observations is becoming critical, given the increasing political
pressure for public authorities to take informed decisions on the environment, security and
climate change.

**4.** **EU** **OBJECTIVES**

The specific objectives of EU action relating to the GMES space component (i.e. the
Sentinels) are to:

    - ensure the continuous availability of environmental data collected through a set of spacebased sensors as an input for the thematic areas in the GMES service component; through:

–
the continuous exploitation of the Sentinels and accompanying research activities
through adequate governance and financing structures;

–
the timely definition, development and procurement actions for renewing the
Sentinels as necessary;

    - stimulate, by lowering the costs of access to earth observation data, the growth of the Earth
Observation downstream sector in terms of jobs, innovation and international
competitiveness.

**5.** **P** **OLICY OPTIONS**

The available policy options are as follows:

    - **Option 1** : Option 1 corresponds to the baseline scenario. The EU would not assume
responsibility for the exploitation of the Sentinels after the GMES initial operations (2011
– 2013). This means that the EU would not exploit the GSC at all beyond 2013. As no
other entity would be willing to finance the totality of the Sentinel exploitation costs, no
data collected through the Sentinels would be available for the GMES service component.

    - **Option 2** : The EU would finance and manage the exploitation only of the first
constellations of Sentinels, but not their renewal. No data from Sentinels will be available
beyond the first constellation.

    - **Option 3** : The EU would finance and manage (i) the exploitation of the initial
constellations of Sentinels, and (ii) the renewal of space infrastructure to ensure sustained
observation over time, given that most of the Sentinels currently developed have a nominal
lifetime of seven years and that the thematic areas in the GMES service component rely on
continuous access to the corresponding data. Decisions on renewal will have to be taken
while the initial constellations are in operation.

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The options incorporate a number of assumptions. First, exploitation activities will be
accompanied by research activities. Secondly, access to data from existing Earth observation
satellites owned by third parties is necessary. Thirdly, data produced by the Sentinels will be
available under full and open access. Fourthly, no forms of co-financing are assessed for the
GSC. As in the case of Galileo [8] and other EU infrastructure programmes, ownership of the
Sentinels could be transferred to the EU at no cost, allowing the EU to impose for Sentinel
data a full and open access data and information policy. Nevertheless, the Commission will
continue to explore whether the development of market opportunities and cost-based user
charges might eventually enable the proportion of public investment to be reduced in the long
run. Generally speaking, the potential financial effort that can be deployed under the EU
budget is not yet known, as priorities and allocations of funding under the new multiannual
financial framework (beyond 2013) will come later.

**6.** **A** **NALYSIS OF IMPACTS**

Consistent with the focus of the proposed Communication, all options are based on variations
in the Space component only, and assume that all other components do not vary.

The options have been analysed both qualitatively and quantitatively. For the quantitative
part, a cost-benefit analysis was based on available data. Benefits arising from GMES have
been quantified in the study ‘Socio-economic benefits analysis of GMES’ by
PriceWaterhouseCoopers (the ‘PWC study) [9] . It sets out in monetary and present value terms
the projected economic benefits (including societal, environmental and other economic
benefits) with respect to a baseline scenario without GMES. In the PWC study, GMES
benefits have been grouped into three high-level categories:

    - **Category 1:** efficiency benefits linked to the use of GMES-related information in
implementing or enforcing legislation or policies that are already in place. Nothing more
than continuous availability of GMES services (and hence of the GSC) is needed for these
benefits to materialise.

    - **Category 2:** benefits linked to the availability of more and better information during the
policy formulation stage. The result would be better policy making at European, national
and regional level, easier and more efficient implementation, and ultimately improved
delivery of policy objectives. There is however a built-in delay between the availability of
information and the materialisation of the benefits, linked to the policy cycle.

    - **Category** **3:** as in category 2, but this time at global level, i.e. linked to the signature and
implementation of international treaties (e.g. on climate change, desertification and
deforestation). As a consequence, there is a much bigger time-lag before they materialise,
but at the same time their magnitude is much greater than in the other categories. An
example of this category is the contribution that GMES will make to climate changerelated policies, through long-term data series on such parameters as sea surface
temperature, sea level rise and CO 2 distribution.

8 See Article 8 of Regulation (EC) No 683/2008 of the European Parliament and of the Council of 9 July
2008 on the further implementation of the European satellite navigation programmes (EGNOS and
Galileo) (OJ L 196, 24.7.2008, p. 1).
9 [Available at http://esamultimedia.esa.int/docs/GMES/261006_GMES_D10_final.pdf.](http://esamultimedia.esa.int/docs/GMES/261006_GMES_D10_final.pdf)

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On the cost side, the costs of both the service component and the space component were taken
into consideration. The latter are based on the ESA Long-term scenario, a cost assessment
prepared by the ESA executive and recognised as a basis for cost estimations by the 6 [th] Space
Council [10] .

In quantitative terms, the options can be compared most easily on the strength of their
generated Net Present Values in the period under consideration — see the figure below [11] .

**NPV comparison among options**
**2009 prices**

35.000,0

30.000,0

25.000,0

20.000,0

**Million €**

15.000,0

10.000,0

5.000,0

    

-5.000,0

Option 3
Option 2
Option 1 baseline

**Year**

Taking additional account of the impacts not included in the PWC study and therefore not in
the above graph, the following comparison can be made (keeping in mind that costs refer to
the GSC, while benefits arise from the whole GMES system):

10 Council Resolution on ‘The contribution of space innovation and competitiveness in the context of the
European Economic Recovery Plan, and further steps’ — 10500/09 of 29 May 2009.
11 The figure shows, for each option, the cumulative net present value (in 2009) of a stream of payments
and benefits starting in 2014 and ending in year X, where X can take on any value between 2014 and
2030.

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|Col1|Effectiveness|Efficiency|Coherence|
|---|---|---|---|
|**Option 1**<br>**(baseline)**|Does not achieve<br>any<br>of<br>the<br>objectives.<br>Impact on the EU<br>budget,<br>however,<br>would<br>be<br>zero,<br>which means that<br>funds<br>would<br>be<br>available for other<br>initiatives<br>and<br>programmes.|Some (low) costs to achieve no benefits<br>(storage of developed satellites).|No benefits therefore no trade-offs.<br>Strongly inconsistent with earlier<br>EU efforts to develop the GSC and<br>with the positioning of the EU<br>within the global Earth Observation<br>EU over the past 10 years.<br>Would be coherent only in the<br>event of a major shift of policy<br>priorities in the EU, i.e. relegating<br>climate<br>change<br>and<br>citizens’<br>security down the political agenda.|
|**Option 2**|Achieves the<br>objectives of<br>provision of<br>information services<br>through sustainable<br>infrastructure only<br>for a limited period<br>(up to 2020). Does<br>not achieve<br>objective related to<br>sustainable<br>downstream growth.|An EU budget contribution to the GSC<br>of<br>approximately<br>€200m/year<br>on<br>average in the next financial framework<br>would enable benefits of between<br>€400m and 900m per year to be<br>achieved<br>until<br>2022.<br>After<br>2020,<br>benefits<br>would<br>drop<br>to<br>about<br>€130m/year, approximately equal to<br>costs in the following period.<br>This option has important built-in cost<br>inefficiencies linked to the ‘stop-and-go<br>approach’. The EU would not benefit<br>from<br>economies<br>of<br>scale<br>in<br>the<br>production of recurrent satellite units,<br>which are important in the space sector.|The impact on EU budget, although<br>higher than in the baseline, is likely<br>to<br>be<br>offset<br>by<br>limited<br>environmental<br>and<br>economic<br>benefits.<br>Policy<br>coherence<br>would<br>be<br>dependent on the capacity of the<br>EU and the rest of the European EO<br>EU to bridge the gap after the<br>lifetime of the first generation.<br>Inconsistent<br>with<br>EU<br>declared<br>ambitions to lead in the climate<br>change arena (in any event climate<br>change will necessitate long-term<br>monitoring activities).|
|**Option 3**|Achieves all policy<br>objectives.|An EU budget contribution to the GSC<br>of<br>approximately<br>€430m/year<br>on<br>average in the next financial framework<br>would enable benefits of slightly less<br>than €1bn/year to be delivered until<br>2022, then peaking at more than<br>€5bn/year as of 2027.|The longer-term investment, higher<br>than in the baseline, would generate<br>positive<br>trade-offs<br>in<br>political<br>priority areas, such as climate<br>change. Consistent with political<br>agenda and EU objectives.<br>Potential for strategic benefits for<br>the EU as global player.<br>The<br>requisite<br>budget<br>and<br>corresponding shift from research<br>to operation would require GMES<br>to be included among the financing<br>priorities in the next EU financial<br>framework<br>and<br>might<br>imply<br>corresponding adjustments in other<br>policy areas.|

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**7.** **M** **ONITORING AND EVALUTION**

The Communication itself will not directly result in new activities being financed through the
EU budget over and above what has already been decided or proposed through FP7,
preparatory actions and GMES initial operations up to 2013. Should the next Commission
choose one of the options requiring the exploitation of the Sentinels post-2014, the
appropriate legislative proposal would be drawn up in line with applicable rules, in particular
regarding the preparation of the next multiannual financial framework and impact

assessments.

In line with standard Commission practice, evaluation will be in three phases (ex ante, interim
and ex post). The interim and ex post evaluation will assess whether the operational objectives
are being / have been met. Additionally, the Commission will evaluate the progress of
exploitation activities before any major decision is taken, including the decision on renewing
the Sentinels. This decision may have to be taken before the start of one or more financial
frameworks due to the long development cycles for satellites. In each policy cycle, decisions
will have to be informed by an update of the cost-benefit case for the various options and a
broad stakeholders’ consultation on the effectiveness and usefulness of the system.

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