European Commission Clears £50m UK State Aid for SABRE Engine Development

State aid: Commission approves £50 million UK support for the research and development of an innovative space launcher engine

The European Commission has found that a £50 million (around €71 million) grant that the UK authorities intend to provide for designing a SABRE space launcher engine is in line with EU state aid rules. SABRE is a research and development (R&D) project carried out by UK company Reaction Engines Limited (REL). The project aims to develop an engine that would power a reusable airframe to launch satellites into low Earth orbit, significantly reducing the costs of such space missions. The Commission found that the measure fosters aerospace R&D in Europe while limiting distortions of competition in the Single Market. Commissioner in charge of competition policy Margrethe Vestager commented: “I am glad that we have approved public funding for the SABRE project. It supports crucial R&D in the challenging area of satellite launches into low Earth orbit – the most difficult and costly step in any space mission. It can lead to significant technological advances that would benefit consumers using products and services depending on these satellites, such as mobile communications, broadcasting, and navigation.” The UK notified plans in January 2015 to support the SABRE project for the design, engineering and assembling of key engine components for integration in a new type of space launcher. The new engine would enable a vehicle to reach orbital velocity and altitude from the Earth’s surface without jettisoning any hardware. The objective is to render the technology less risky by significantly improving each of SABRE’s numerous components and subsystems. If successful, the engine would be used to power the prototype of a reusable airframe, SKYLON, for flights into low Earth orbit, drastically reducing launch costs and enabling a step change in outer-space transportation technology. The Commission assessed the project under its 2014 Framework on state aid for Research, Development and Innovation (R&D&I), which requires that state aid is proportionate to the objective and limited to the minimum necessary to avoid crowding out private investors. It concluded that the funding raised at this stage from private equity is insufficient to bring the project to completion. This is mainly because private investors are unable to fully apprehend the risk and opportunities of the endeavour due to a lack of information on these. The £50 million grant, along with money raised by REL from private investors, will allow the project to advance. The UK authorities have also committed to ensure that private investors participate in each stage of the project so as the limit the use of public money in line with EU state aid rules. Furthermore, the risk of competition distortions is presently minor as the aided project is relatively remote from the market and REL is currently not active in the space launcher engine market. The Commission therefore concluded that the project’s contribution to common EU R&D&I goals clearly outweighs any potential distortion of competition brought about by the public financing. The non-confidential version of the decision will be made available under the case number SA.39457in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.