Although President Biden’s recent FY22 budget reflects a major change in priorities from the previous administration, it remains positive for the space industry. The new administration’s first budget shows it’s committed to commercializing the space economy and national security priorities despite significant resource constraints.
Biden’s $1.5 trillion budget request includes a 16% increase to domestic programs to boost education, public health and combat climate change. While the defense budget only received a 2% increase to $715 billion, this was in-line with industry expectations.
Looking behind topline numbers, however, the budget remains positive for New Space startups as it prioritizes defense research, development, test, and evaluation funding to invest in breakthrough technologies that would drive innovation and underpin the development of next-generation defense capabilities. In addition, the budget prioritizes shipbuilding, heavy investment in sea, air and space centric platforms to counter threats from China. The budget also supports “ongoing” nuclear modernization programs, fund further development and testing of hypersonic strike capabilities. The Pentagon pledges to “divest legacy systems and programs to redirect resources from low to high priority programs”. It also plans to invest heavily in research and development to bring high-tech manufacturing back to the United States.
As for NASA, Biden’s budget request of $24.7 billion is up 6% from last year. The budget shows continued support for space exploration with $6.9 billion for the Artemis program that would return astronauts to the moon by 2024 ($325 million higher than last year), and more than $3 billion for the International Space Station. While the Trump administration proposed cuts for programs like Earth Science and space technology R&D, the new budget has $2.3 billion for Earth’s science programs to develop the next-generation Earth Observation satellites and is proposing an increase of 27% to $1.4 billion for technology research & development.
Space technologies such as Earth Observation, IoT satellites and Geospatial Data Analytics are playing an increasingly important role in environmental protection as they are used to monitor and track changes on Earth over time. We highlight initiatives from the $14 billion request to fight climate change that are positive for space.1) $2 billion (up $500 million y/y) for weather satellite programs at the National Oceanic Atmosphere Administration (NOAA); 2) $15.4 billion for clean energy technologies at the Department of Energy (DOE); 3) $1.8 billion to reduce greenhouse gas emissions for the Environmental Protection Agency (EPA); 4) $1 billion to increase in forest resilience project for the Department of Agriculture, $750M to study climate change and wildfires, and clean up abandoned mines oil and gas wells for Department of Interior; and 5) funding to support improvements of the national airspace system, including integration of commercial space launches.
Keep in mind this is a first look budget providing only top line numbers and high-level summaries until the White House issues a full budget proposal in May. In addition, the budget still requires negotiation in Congress to pass an appropriations bill before the new fiscal year begins on October 1, 2021. Reaction to Biden’s budget has been mixed on the Hill with Republicans raising national security concerns about defense spending, and liberal Democrats demand even bigger cuts to the military budgets. Space appears to be well-positioned with continued bi-partisan support. Stay tuned.