Alternative financing mechanisms may be needed to support development of lunar infrastructure without relying on uncertain government programs. (credit: Anna Nesterova/Alliance for Space Development)

The promise of return on investment does not disappear in cislunar space and beyond

by Vidvuds Beldavs
Monday, February 22, 2021

In a recent essay, Josh Carlson discusses the importance of the United States taking a leadership role in commercial space activities (see “Reflecting core American values in the competition for the final economic frontier”, The Space Review, February 15, 2021). The premise of the article that “the economic impetus drives civilizations to act and achieve” can be debated, but political imperatives cannot motivate sustainable space development. Sustainable presence in outer space demands that the large investments required generate returns that are competitive with other investments and that promote further growth.

Tragedy of the time horizon

Carbon neutrality is a goal that is now widely accepted around the world, but carbon neutrality cannot create profits in a world that runs on oil, gas, and coal. The climate change policy of the EU has set the goal to achieve carbon neutrality by 2050. This can create profits with the adoption of a “carbon coin” as presented in Kim Stanley Robinson’s climate change thriller Ministry for the Future and widely discussed in policy and economics literature. Robinson speaks of the “tragedy of the time horizon” as similar to the tragedy of the commons in that short-term decisions can create irreversible problems in the future. The carbon coin and associated carbon taxes set the goal of carbon neutrality by 2050 with profits generated thru reduction of carbon emissions.

Lunar and cislunar industrial development faces a similar tragedy of the time horizon problem. In conventional economics there is no solution because at present there is no business case for industrial development of the Moon that does not depend on government subsidies. Every dollar invested is a politically decided. Politics can change and there goes the future.

The International Lunar Decade

The International Lunar Decade (ILD) was conceived to address the tragedy of the time horizon problem thru a decadal initiative to demonstrate that long term profitability and sustainability of lunar industrial development is feasible. Feasibility would be demonstrated, and then more conventional economic calculations would drive further development. The demonstration of feasibility of lunar industrialization would be followed by accelerating growth in space-related ventures as each venture would contribute to improved conditions for profitability of subsequent ventures.

The achievements of SpaceX are highly impressive, including stimulating many other ventures to also pursuing reusable rocket technology. But lower launch costs alone are not sufficient to guarantee sustainability of lunar industrial development without government subsidies. Space-based solar power (SBSP) was the hope of Gerard K. O’Neill to achieve economic takeoff for lunar industrial development, but the tragedy of the time horizon defeated the idea in the 1980s until new approaches to SBSP, such as John Mankins’s SPS-Alpha with ultra-modular construction, have made SBSP thinkable again. However, Mankins ignores lunar resources in his book and proposals, concentrating instead on Earth-launched options. There is an abundance of scenarios where SBSP could be competitive with other options on a levelized cost basis. However, the compelling case for emergence of SBSP as a significant source of electrical power on Earth remains to be made. If most of the mass to build the powersats came from the Moon as the technology were to be scaled, then SBSP construction costs and delivered power could be driven down even further to open up markets for baseload power on Earth.

Al Globus and others have proposed a significantly cost-reduced “space colony” in the proposed “Space Settlement: an Easier Way”. Costs are reduced from the original O’Neill concept of a free space habitat by locating the habitat in an equatorial Earth orbit within the Van Allen belts. Globus also does not source the structural elements, oxygen, soils, and other elements of the space habitat, but relies on Earth-launched materials. However, most of the needed materials are available in the lunar regolith. Such a habitat could be sized to serve as an orbital resort and generate billions in revenue. Other uses could include space manufacturing operations.

The key to demonstrating the feasibility of lunar industrial development is to source as much material from the Moon as soon as technically feasible, because costs would rapidly decline as energy and support systems are deployed lowering processing costs with each iteration. The cost of launching from the lunar surface to manufacturing and supply depots in Earth orbit and cislunar space is a potential bottleneck. There’s a need for launch solutions that can offer large-scale, possibly near-continuous, operations that can support growing manufacturing operations in Earth orbit. O’Neill proposed the mass-driver as a solution in his book The High Frontier. However, this has limitations with a fixed direction and launch angle

If the space economy could reach a trillion dollars by 2030 then, after demonstration of the economic feasibility of lunar industrial development, a $10 trillion space economy by 2040 would be within reach. If there were growing mining and shipping capacity on the Moon, and manufacturing and assembly capacity in Earth orbit and cislunar space, then large-scale space facilities such as orbital resorts, planetary defense systems, and SBSP systems could be pursued with the assumption that successor facilities would be lower cost. Given the core industrial capacity would be deployed for a significant time into the future, costs would continue to decline, which would widen market opportunities.

At present, hundreds of billions of dollars are being invested in power generation, resource extraction, and transportation infrastructure. Comparable investments could be made in space development if economic feasibility could be demonstrated and there was a credible prospect of rapidly declining costs for many years into the future. Threats exists to survival of civilization from outer space that may be comparable to climate change in terms of destruction. Consider a coronal mass ejection event worse than the Carrington event of 1859, with worldwide damage to computer and communications capabilities. Theoretical work has been done on planetary defense, but infrastructure and agreements for a global response do not exist. Given lunar and cislunar industrial development, credible defenses from asteroid impact could be mounted.

Addressing the tragedy of the time horizon for space development

Earlier, I proposed a mechanism to address the tragedy of the time horizon for space development by assigning value to claimed future space resources (see “The asteroid mining bank”, The Space Review, January 28, 2013). Such a model could potentially work if there were rules governing the use of outer space resources and the assignment of claims to resources and existence of mining operations. Ideally, the future value of the space resources would operate similar to the carbon coin for decarbonization to fund investments that contribute to space industrialization. The asteroid mining bank idea could potentially be redefined to use a model of lunar/cislunar industrial development to drive the value of a space coin with an estimated risk level associated with the economic activity anticipated by 2050. If the central banks that back the major currencies that comprise the International Monetary Fund (IMF) basket of activity weighted currencies would agree to lend at a rate that reflects the risk level associated with reaching a defined level of lunar economic activity by 2050, then long-term projects could be financed thru the creation of new money from an international space investment fund (ISIF).

Changing the policies of international agencies like the World Bank and IMF to adopt remove uncertainties from long-term space development would be exceedingly difficult and probably impossible. A process is needed to search for effective solutions to the tragedy of the time horizon for space development. The MIT Center for Collective Intelligence (CCI) has developed a process involving about 120,000 people to pool their intelligence to address complex problems like climate change. One example of the work on climate change is the Greencoin project.

CCI or another similar organization, such as the Frauenhofer Institute for Systems and Innovation Research (ISI), needs to address the critically important problem of the tragedy of the time horizon that is retarding the launch of large-scale lunar industrial development. Given such a solution, projects that can be profitable in the long-term despite high financing costs in the early stages could be financed. This would drive the cost reductions to make lunar industrial development ultimately financeable on more conventional financing terms as time progresses.

Key assumptions of a lunar centric model for space industrialization are:

• Large structures in space need to be assembled from components manufactured in space. Construction of ISS is not a good model for the future when much larger structures will be built.
• The Moon is the low-cost site for materials for space manufacturing. Many important materials are on or near the surface, and the vacuum and fractional gravity of the Moon promises launch costs from the Moon that are a fraction of launch from Earth.
• Lunar industrial development can make important contributions to developments in Mars orbit. The delta-v of shipment to Mars orbit from the lunar surface is less than launch from Mars. Industrial development in Mars orbit using lunar materials can lower costs and improve effectiveness of operations on Mars.
• It will become increasingly urgent to limit launch of spacecraft to LEO from Earth as congestion from satellite megaconstellations increases and suborbital intercontinental transportation takes off following the model proposed by Elon Musk.
• Climate change is a threat to all countries and urgent action is called for to limit or eliminate large scale resource extraction on Earth, as well as to limit launches through the atmosphere.
• Billionaires can speed up development but international cooperation is critically needed to demonstrate the feasibility of self-sustaining lunar industrial development.
• The ILD as a framework continues to be relevant.

These assumptions could drive the creation of a financial model that would permit the calculation of the size of the space economy by 2050 given these assumptions, and an alternative scenario where the assumptions are not accepted and the tragedy of the time horizon continues to limit investment in space development. Given that a $10 trillion space economy could be created by 2040, then by 2050 the difference in total wealth between the two scenarios could be a compelling argument for international cooperation in the creation of mechanisms to finance space development.

NOM4D progam

DARPA’s proposed Novel Orbital and Moon Manufacturing, Materials and Mass-efficient Design (NOM4D) program strikes at the heart of the tragedy of the time horizon for space development. NOM4D is aimed at linking lunar industrial development with construction of large space structures and manufacturing in Earth orbit and cislunar space.

NOM4D speaks to Krafft Ehrike’s statement: “If God had intended for mankind to become a spacefaring species, he would have given them a moon.” The Moon can be the lowest cost source for materials for industrial development of the Moon, cislunar space and Mars orbits. Gerard K. O’Neill proposed use of lunar materials to construct SBSP in The High Frontier in 1977, but the scale of the undertaking coupled with the non-existence of markets for outputs and much lower cost alternatives for energy doomed the idea demonstrating the tragedy of the time horizon. Technologies and conditions on Earth have dramatically shifted in the intervening decades with NOM4D a sign of our times.

Moon-Earth workshop

In November 2020 we began planning a workshop called Moon – Earth linking SBSP deployment for Earth to lunar industrial development, originally scheduled for January 14, 2021. Subsequently, we rescheduled to March 11, 2021. The scope of the idea has grown, resulting in a narrowing of the focus of the event to a planning workshop for a conference. Interested readers can e-mail me about their interest in participating and contributing at Vid.beldavs@fotonika-lv.eu.

Vidvuds Beldavs is a US citizen who has semi-retired to Latvia where he serves as chairman of the Riga Photonics Centre. Beldavs has been active in space advocacy from the mid-1970s when he developed a class on space industrialization and national priorities.

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