Economic subsidy edicts can leverage the Brazilian aerospace sector

The Brazilian Space Industry had been without investments for almost 8 years

Recently, the Federal Government announced three notices of economic subsidy for the industries of the Brazilian aerospace sector, which have the potential to shape the future of this segment. On August 3, the Small Launching Vehicle for the launching of nano and/or microsatellites was launched, with a total value of R$ 190 million.

On July 15, the public notice was published for Demonstration Platforms for New Aeronautical Technologies (PDNT), worth R$140 million, and on June 29, the public notice for the Small High Resolution Earth Observation Satellite, worth R$220 million.

The president of AIAB (Aerospace Industries Association of Brazil), Julio Shidara, explains that these opportunities can leverage the Brazilian aerospace industry and presents the reasons why they are also important for Brazil.

The president of AIAB (Aerospace Industries Association of Brazil), Julio Shidara

What do these notices represent for the Brazilian aerospace industry?

Julio Shidara – For the industries of the aeronautical sector, the subsidy for demonstrator platforms will provide adequate conditions for the development of technologies, still in a pre-competitive phase, that will enable, in the future, urban mobility solutions, with disruptive features such as vertical take-off and landing, fully electric propulsion and autonomous navigation, among others, not to mention the indirect benefits resulting from technological spillover to other sectors of the economy. A continuous and intense technological innovation effort to increase the competitiveness of its products is a matter of survival for the Brazilian aeronautical industry. Without this, there is a serious risk of losing, quickly, participation in the important global market in which it operates, which is characterized by fierce and increasing competition.

For industries in the space sector, it represented a great relief, because their participation in the Multi-Mission Platform (PMM) project, the last major project that involved the Brazilian space industry in a significant way, was concluded more than 7 years ago, and no new projects with industrial involvement have emerged since then. Given this scenario, which represented one of the most severe demand crises in the recent history of the Brazilian Space Program (PEB), several companies in the space sector were on the verge of collapsing, which would cause the loss of control over technologies that had been conquered over decades of PEB and that are essential for future space projects of interest to Brazil. The satellite and launcher edicts are unique opportunities for the Brazilian space industry to demonstrate its maturity and competence to develop complete space systems, as the industry has long wanted, and according to the guideline recommended by the National Policy for the Development of Space Activities (PNDAE).

What are the main characteristics that differentiate the current calls for proposals for economic subsidies from all the previous ones?

Shidara – The current calls for proposals bring to the scene two important paradigms that will enhance the return on public investment in technological innovation for the strategic Brazilian aerospace sector.

The first paradigm is the non-spraying of resources, concentrating them in more systemic thematic areas, which have greater potential to effectively generate innovative products.

The second paradigm, particularly notable in the calls for proposals for the space sector, is the definition, as thematic lines, of complete space systems. Industry will have the opportunity to demonstrate that it has the competence, both technical and managerial, to develop a complete satellite and launcher, in close partnership with other entities in academia and public Scientific, Technological and Innovation Institutions (ICT), members of the triple helix of innovation.

These new paradigms will not only provide a greater role for private initiative but will also create conditions for the industry to contribute more intensely in the development of future space projects to meet the demands of Brazilian society.

What factors contributed to make these edicts feasible?

Shidara – The consistent support offered by the members of all the decision-making instances of the governance structure of the National Fund for Scientific and Technological Development (FNDCT) was determinant. All of them deserve our recognition, our gratitude and our appreciation for the sensitivity they had to perceive the strategic relevance of the space infrastructure for the social and economic development of Brazil.

We must also recognize and thank the Ministry of Science, Technology and Innovation (MCTI) and the Financier of Studies and Projects (FINEP) for their efforts in making the calls for proposals possible.

The institutional support of organizations that make up the National System for the Development of Space Activities (SINDAE), such as the Brazilian Space Agency (AEB), the National Institute for Space Research (INPE), and, with particular commitment, the Aeronautics Command’s Department of Aerospace Science and Technology (DCTA), among others, was also essential for the invitations to bid for the satellite and the launcher.

What are the future prospects?

Shidara – It is appropriate to highlight an externality that contributes to configure the current moment as a watershed for technological innovation in Brazil, not only for the aerospace sector. The recent approval of the Complementary Law no. 177/2021, which vetoes the contingency of FNDCT resources, will drastically alter the promotion of scientific and technological development in Brazil. With annual revenues forecast for the coming years already reaching the R$ 9 billion mark, the FNDCT will be the main source of support for technological innovation in Brazil. It is true that there is still room for improvement, such as seeking the balance point in the offer of reimbursable and non-reimbursable resources, as well as promoting legislative changes so that the Technological Order (ETEC), one of the main instruments for fostering innovation, provided for in the Legal Framework for Science, Technology, and Innovation, regulated in 2018, may now be used within the scope of the FNDCT.

I am convinced that expressive concrete results will be reaped in less than a decade. And the reason for this conviction is that, despite my Japanese origin, I am very proud to see that the Brazilian professionals who work in the innovation ecosystem are differentiated by their creativity, ingenuity, flexibility, and perseverance, among many other virtues.

In this context, areas declared as priority such as the space sector, should receive treatment from the Brazilian State programs, with priority allocation of financial resources (both from FNDCT and the federal budget) for its development.

With a long-term commitment to resource allocation, I am convinced that in less than a decade the Brazilian space industry will gain a leading role on the global scene, as is the case today with Brazil’s respected aeronautics industry.

Why is the space infrastructure so much more important for the country than most of society perceives?

Shidara – Satellites, launchers, and space applications constitute an essential infrastructure on which entire sectors of any country’s critical infrastructure depend, such as electricity distribution, communications, transportation, and the financial system, to name just a few examples.

In Brazil, critical infrastructure systems depend almost entirely on foreign satellites in order to provide essential and basic services to citizens. But, unfortunately, the average Brazilian citizen is not aware of this and, on the contrary, takes for granted that all the services they use in their day-to-day lives are dependent on space infrastructure.

Would the Brazilian electrical grid be able to withstand a failure of the American GPS? Or would we suffer a blackout of national proportion?

In 2020, then-President Trump issued an Executive Order with guidelines to mitigate the impacts that an eventual failure of the GPS system could cause on critical infrastructure in the United States such as the power grid, communications, transportation, and agriculture, among others.

Brazil, a food producer for the world of growing relevance, will increasingly depend on systems like GPS to increase its productivity, in the so-called precision agriculture. Would it be reasonable to continue to depend on foreign constellations for something so important to the Brazilian economy? In a study conducted by the consultancy RTI International for the US government in 2019, it was estimated that a 30-day interruption in GPS services would cause economic impacts of USD 30 billion on the US economy. The impacts would rise to USD 45 billion if the outage occurred during a critical period for agriculture.

We need to invest in making society aware of the relevance of space infrastructure to its daily life and the vulnerability of Brazil’s total dependence on foreign satellites. Only in this way will the PEB gain legitimacy in Brazilian society and thus be able to receive consistent investments on a permanent basis, without the upsets that have occurred in recent years.

Finally, it is important to emphasize that the Brazilian aerospace industry is receiving the opportunities provided by the calls for proposals with a great sense of responsibility, fully aware that its future will depend on the success of the results of the grants.

The Brazilian aerospace industry will not lack dedication, effort and commitment to honor the vote of confidence deposited by the administrators of the projects.

*** Translated by the DEFCONPress team ***

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