RichLegg
By Jamaal Powell
In the current space environment, an unprecedented number of satellite launches have market participants examining the sustainability of space – and rightfully so.
National security systems, internet access on bicoastal flights, reception for backpackers in Nepal and methane emission tracking – today’s satellites are relied on for more than just weather forecasts and television.
As these use cases increase, so does the number of satellites in orbit – which sits at over 6,000 today. We’ve seen an unprecedented rate of satellite deployment year to date. Effectively, all of these satellites have been launched into space 500 to 1000 kilometers above the earth, within “low earth orbit” (LEO), the closest orbital belt.
“Right now, there are thousands of metric tons of orbital debris in the air above – and it is going to grow.” – Jessica Rosenworcel, Chairperson, U.S. Federal Communications Commission
As one might expect, more satellite congestion results in more space debris, which has the potential to be very damaging. Debris smaller than 10 centimeters (just imagine a screw) cannot be effectively tracked and, when moving at 15,000 miles per hour, can destroy a satellite – yielding more space debris. This cascading effect is known as Kessler Syndrome, as every collision increases the likelihood of additional collisions, potentially rendering the orbit unusable. This is what is getting the attention of global market participants in the satellite industry as many focus more intently on “space sustainability.”
Similar to climate change 50 years ago, space calls for sustainability today.
The core purpose of space sustainability is to promote the continued ability of space to economically support humanity over the long term. With the rapid rate of change in space, we are reaching an inflection point where decisions need to be made today to protect the environment tomorrow. In September, the FCC took a first step and adopted a deorbiting rule that requires operators to dispose of satellites within five years of mission completion. We believe that forthcoming regulation will encompass the LEO “carrying capacity,” sustainable satellite population distribution and space debris management.
Tighter regulations create potential credit risks for satellite operators, which comprise over 12% of telecom issuers in the high yield index. In line with Neuberger Berman’s active engagement approach, we examine company environmental, social and governance policies and confirm they are already incorporating a rigorous approach to space sustainability ahead of the evolving regulatory environment. Taking a forward-looking approach to regulations is an important element of a credible business plan as we seek to foster sustainable environments – both on earth and in space.
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