Space Industry Bill [HL]

Baroness Sugg Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 18th October 2017 Lords Chamber

[Lord Tunnicliffe]

My Lords, this is an interesting point. I hope that the Minister will take it away and give it some consideration. I think we all agree that the whole issue of liability and insurance is important to get right so that the industry does not fail due to crippling cost.

[Baroness Sugg (Con)]

My Lords, I thank my noble friend Lord Willetts, who is not in his place, for his comments in Monday’s debate about the need for flexibility for licensing constellations and the benefits of small satellites. I hope also to address the concerns of the noble Lord, Lord McNally, from that debate about the length of the licensing process and the insurance cost for smaller satellites—and, indeed, nano satellites.

This amendment gives me the chance to explain the work that the UK Space Agency is already doing to improve the current licensing regime under the Outer Space Act. This work is of course relevant to the Bill as, when it comes into force, it will regulate the operation of a satellite in orbit that is carried out from the UK.

The amendment moved by the noble Lord, Lord Fox, would make it mandatory that, within 12 months of Royal Assent, the Secretary of State must issue a consultation. This consultation would explore a traffic light system to license the operation of small and nano satellites, with the potential to waive the in-orbit insurance requirement under certain circumstances for some small satellites fast-tracked under that system. Finally, it would also explore how insurance requirements could be aggregated for constellations of satellites.

The UK Space Agency already has this work in hand, and I shall take this opportunity to set out what it is doing in more detail—at some length, I fear. The agency conducted a review to evaluate how the UK’s regulatory approach might be tailored for the in-orbit operation of small satellite systems. The outcome of the review was a series of recommendations, and comments on these recommendations were invited from industry.

Feedback was also sought at the regulatory advisory group, which is a meeting co-chaired by the UK Space Agency with industry, where the small satellite community is represented. This review allowed the agency to develop the traffic light system which is currently being trialled ahead of full implementation in the near future. This system gives potential applicants of standard, small satellite operations an idea of the likely outcome of their licence application in advance of lodging a full application. It is a fairly simple system. A green rating will be given where a mission is likely to get a licence; an amber rating signals that a mission is likely to get a licence with some modifications or clarifications; and a red rating means that the potential applicant is unlikely to receive a licence.

For recurrent applications for very similar missions by the same operator, the questions an applicant will be required to answer will be streamlined. Where an applicant is engaging in a repeat mission, some answers will be reused by UKSA in order to minimise the administrative overhead to operators. We expect this to speed up the licensing process for these types of missions.

At this point I shall say a few words about the way in which constellations are licensed. A constellation can be launched under a single launch licence if all the satellites can go on a single launch vehicle. However, the activity of operating a satellite also needs to be licensed as the operator needs to be licensed to carry out the in-orbit operation of each satellite. This is to ensure that the regulator has effective regulatory oversight of each satellite within the constellation. That allows the regulator to direct the operator to take action in relation to each satellite without affecting any of the other satellites under the control of that operator. For example, if 100 satellites are to be launched over four launches, an operator would need to submit only four applications and will result in a licence being issued for each of those 100 satellites.

In addition to the satellite system, the UK Space Agency is considering whether, for certain green-rated missions, the insurance requirement can be reduced or even removed. This assessment will be dependent on a number of risk factors, including the satellites’ operating altitude and whether they are equipped with propulsion systems that allow them to avoid potential collisions with other space objects. Furthermore, the agency is already evaluating policy options to tailor insurance requirements for satellite fleets or constellations, which we discussed in the debate on Clause 3. The feedback from industry is that obtaining a set level of insurance cover for every satellite in a large constellation is prohibitively expensive. Such a requirement could also quickly exceed the capacity of the space insurance market.

We understand that we need a solution that is available and affordable but still offers government and the taxpayer protection by providing sufficient funds in the event of a claim. UKSA is currently developing a policy model which is likely to require operators of multiple satellites to hold a given level of insurance coverage for the damage caused to third parties through collisions—in other words insurance per event rather than per satellite.

Key stakeholders will be invited to comment on the Government’s proposed new policy model, which has been developed in response to the space sector’s innovative approach towards new business models and the development of smaller and more capable satellites, including the nano satellite mentioned by the noble Lord. These matters will be discussed at a workshop on the traffic light system and the insurance requirements for small satellites, constellations and fleets, which is expected to take place by the end of this financial year.

As work on both the traffic light regime for small satellites and nano satellites and insurance requirements for constellations and fleets is already well in hand and likely to be finalised within 12 months of the Bill receiving Royal Assent, this amendment is not necessary. While we appreciate the content of the amendment, the agency is already engaging with the industry and a mandatory consultation in this area would be a duplication of work. I therefore ask the noble Lord to withdraw Amendment 38.

[Lord Fox]

I thank the noble Baroness for her comprehensive answer, and I will be studying it closely in Hansard as it is hard to take in on the fly. If she could write to me about the basic criteria used to flag green, red and amber, that would also be helpful, to give an idea of the parameters being used to make those judgments. On that basis, I beg leave to withdraw the amendment.