The proposed EU Space Act could become one of the most important developments in Europe’s space economy. For the first time, it would establish EU-wide rules on the safety, resilience and environmental sustainability of many space activities. A common EU framework has long been sought to support competitiveness and create a more level playing field across the Union. Yet, European space law has always faced an important constraint: the Treaty on the Functioning of the European Union permits the EU to establish measures necessary to achieve the objectives of European space policy but expressly excludes the harmonization of member states’ laws.
So, what has changed? Strictly speaking, the treaty has not. The European Commission has instead framed the proposed Space Act as an internal-market instrument, relying on EU competences connected with the establishment and functioning of the internal market.
Explore the October/November 2026 Issue
Check out more from this issue and find your next story to read.
That choice of legal basis has consequences. The act’s architecture must be built around the provision of services. This creates a central question of scope. An operator operating its own satellite is not providing a service to a third party, unlike, e.g., an operator providing launch services. The proposal addresses that challenge by coupling the regulation of upstream activities with downstream provision of space-based data in the Union: space activities that generate space-based data provided in the EU market are subject to the EU Space Act as well.
But the debate should not be confined to competence. The key practical question is whether the act will create a genuine internal market for space services or add a further regulatory layer that undermines the competitiveness it seeks to foster. That question matters especially in the context of the 2024 Letta and Draghi reports, both of which placed competitiveness and the completion of the single market at the center of Europe’s economic agenda.
Recent studies from the Computer & Communication Industry Association (CCIA) estimated that the EU Space Act would increase manufacturing and design costs for Low-Earth Orbit (LEO) satellites by 10 percent to 46 percent and decrease demand for LEO satellites in the EU by 18 percent to 48 percent.. And it could represent a loss to European companies of 245 million euros ($279 million in annual revenue, 100 million euros ($114 million) in profits, according to an assessment by the Progressive Policy Institute. In turn, the European Commission’s own assessment concludes that the benefits of common rules (including avoided collisions, greater resilience and a less fragmented market) could outweigh the overall costs.
Indeed, there is a case for EU action. European operators currently face a patchwork of national space laws and administrative practices, while several member states still lack a dedicated national framework altogether. That fragmentation makes it more difficult to scale services across borders, increases transaction costs and complicates investment assessments. A common set of requirements on safety, resilience and sustainability could therefore support a more predictable operating environment and, in turn, support investment.
The commission’s original proposal framed compliance with this common set of requirements as part of a licensing framework enabling the provision of space services across the EU. The latest version recasts this as a certification, generally issued by a national authority, and valid throughout the EU. This resembles a mutual-recognition or “passporting” logic, an approach already familiar in financial services, in the future electronic communications regulation and reflected, in a different form, in the proposed 28th regime for an EU Inc.
However, the system could still create friction in practice. The certification would operate alongside national licensing, and the competent authority responsible for certification may not be from the same member state as the authority responsible for the operator’s national license. Unless procedures and information-sharing are carefully aligned, operators could face duplicative supervision, overlapping requests and additional administrative burdens. A credible coordination framework for national competent authorities is therefore essential – one capable of resolving cross-border issues and promoting consistent approaches to space activities across the EU, much as BEREC and the European Data Protection Board help foster regulatory consistency in the telecoms and data-protection sectors.
The proposal nevertheless includes important flexibility measures. It provides for a lighter-touch regime for SMEs and for research and educational institutions. Further improvements would still be welcome: in particular, a lighter and faster pathway for low-risk activities and a broader range of research and development missions.
The proposal also provides flexibility mechanisms for foreign operators within its scope, including derogations, equivalence decisions and mutual-recognition arrangements. Some stakeholders have expressed concern that, if applied too broadly or inconsistently, these mechanisms could place EU operators at a disadvantage by granting non-EU competitors easier routes to the EU market. At the same time, the United States has been particularly vocal in criticizing the proposal’s potential extraterritorial reach and the compliance burden it could impose on non-EU space operators serving EU customers.
The latest draft also seeks to clarify and streamline cybersecurity obligations in relation to the cross-sector frameworks under the NIS2 and Critical Entities Resilience Directives, thereby reducing the risk of duplication. In addition, the sustainability requirements have been simplified compared with the original proposal.
Despite the proposal’s efforts to reduce compliance burdens, several issues still require attention, many of which affect the EU market most directly. For example, EU operators may not resort to commercial collision avoidance services but only to the EU SST, effectively restricting the development of this emerging market. And only space data generated by satellites registered in the EU registry may be placed on the EU market (subject to certain exceptions, including research and education), which could reduce downstream EU companies’ access to diverse global data sources and affect value-added services.
It further remains unclear whether, and to what extent, the act is intended to cover satellite communications. If satellite connectivity services are captured, the interaction with the proposed Digital Networks Act needs much clearer coordination. Otherwise, the Space Act could be seen as creating a form of “conditioned skies” regime, under which access to the EU satellite-connectivity market depends not only on telecoms rules, but also on compliance with a separate space-law framework. An express carve-out would provide valuable legal certainty and avoid creating an additional market-entry filter for satellite connectivity.
Finally, dual-use requires greater precision. The proposal excludes space objects used exclusively for defense or national-security purposes, as well as objects temporarily used for operations related to defense or national security. Dual-use activities are therefore not automatically outside the Act’s scope. That is a sensible starting point, but the final text would benefit from a more operational distinction between the space object, its components and the particular use being made of it, including by allowing an operator to distinguish between defense and civilian components of a satellite, in addition to civilian and defense uses of a satellite. The EU could draw useful lessons from the AI Act’s approach regarding civilian and defense AI systems and uses.
The test is straightforward. The EU Space Act should make Europe safer, more resilient and more sustainable without making it materially harder to build, finance, insure, launch and operate European space businesses. If the final act achieves that balance, it could become the legal infrastructure of a stronger European space market. If it does not, it risks becoming another example of Europe regulating a strategic industry faster than it enables that industry to grow. VS
