|Sustainable project finance in the European space industry : addressing the liquidity gap for sustainable project finance with mezzanine financing
|Jermaine F. Gutierrez, Author
|ISU Individual Project
|Illkirch-Graffenstaden (France) : International Space University, 2022
|1 electronic resource (53 p.) / col. ill.
|Includes bibliographical references
|Sustainable business practices and low emissions technologies are at the forefront of the European public agenda. The European Space Agency (ESA) has launched the Framework Policy for Sustainable development. The first full-scale initiative to investigate the multifaceted impact of space operations on the environment. The framework culminates in the creation of the Life cycle assessment (LCA) tool. From the private perspective, a dynamic will of shareholders is driving large privately-held ventures of the ESI towards displaying their efforts for a more sustainable future. In parallel, NewSpace ventures provide cutting-edge technological solutions to space sustainability issues. Sustainable projects by privately-held ventures, large and small, or national space agencies, are extremely expensive undertakings. Sustainable projects suffer from the limitations of classical project valuation; rewarding cash flows (CF) and other benefits are reaped far out in time, and positive externalities of public good and service provision often left unaccounted for. As a result, private capital markets alone often fail to adequately supply the necessary capital to sustainable development efforts. This report outlines the current sustainable development efforts in the ESI, investigates the funding mechanisms supporting these projects, uncovers and outlines the funding gap for sustainable projects, and ultimately provides recommendations to the space financing community. Having raised key topics and detailed these with existing relevant literature, findings showed sustainable projects are reliant on private-public partnership agreements to acquire funding while mitigating market failures such as information asymmetry and moral hazard. This report proposes a national development bank as the most suitable financial institution to address market failures of sustainable project finance and problems arising from specificities of the space industry. Mezzanine financing is shown to be the most flexible option to successfully increase private capital inflow in the ESI for sustainable project financing.
|ISU program :
|Master of Space Studies
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