Economics of In-Space Industry and Competitiveness of Lunar-Derived Rocket Propellant

Abstract: Economic parameters are identified for an in-space industry where the capital is made on one planet, it is transported to and teleoperated on a second planet, and the product is transported off the second planet for consumption. This framework is used to model the long-run cost of lunar propellant production to help answer whether it is commercially competitive against propellant launched from Earth. The prior techno-economic analyses (TEAs) of lunar propellant production had disagreed over this. The "gear ratio on cost" for capital transport, G, and the production mass ratio of the capital, phi, are identified as the most important factors determining competitiveness. The prior TEAs are examined for how they handled these two metrics. This identifies crucial mistakes in some of the TEAs: choosing transportation architectures with high G, and neglecting to make choices for the capital that could achieve adequate phi. The tent sublimation technology has a value of phi that is an order of magnitude better than the threshold for competitiveness even in low Earth orbit (LEO). The strip mining technology is closer to the threshold, but technological improvements plus several years of operating experience will improve its competitiveness, according to the model. Objections from members of the aerospace community are discussed, especially the question whether the technology can attain adequate reliability in the lunar environment. The results suggest that lunar propellant production will be commercially viable and that it should lower the cost of doing everything else in space.

• The paper identifies the 'gear ratio on cost' and production mass ratio as key factors determining the competitiveness of lunar-derived propellant.
• It employs a simplified economic model that corrects past methodological errors in transportation architecture and capital selection.
• The study demonstrates that tent sublimation technology can exceed production thresholds, paving the way for a sustainable cislunar economy.

Overview of the Economics of In-Space Industry and Competitiveness of Lunar-Derived Rocket Propellant

The paper authored by Philip T. Metzger addresses the techno-economic potential of lunar-derived rocket propellant. It establishes a comprehensive framework to evaluate the long-run economic viability of producing rocket propellant from lunar resources compared to terrestrial sources. This evaluation is grounded in defining crucial economic factors and correcting technological and methodological assumptions that have led to divergent predictions in prior studies.

Amongst the most significant findings, the paper identifies the "gear ratio on cost" for capital transport, $G$, and the production mass ratio, $\phi$, as dominant factors impacting the competitiveness of lunar-derived propellant. Through an examination of previous techno-economic analyses (TEAs), the author identifies critical errors in these analyses, often related to transportation architecture choices and capital selection that failed to optimize these factors. Furthermore, the paper posits that tent sublimation technology demonstrates a production mass ratio that exceeds the threshold for competitiveness, even within the challenging environment of Low Earth Orbit (LEO).

The implications of the argument that lunar propellant can reduce broader space operation costs are substantial. Theoretical models predict that lunar mining and propellant production could substantially lower costs across the board for space-based operations, thereby catalyzing the development of a wide-ranging cislunar economy. This concept challenges existing skepticism within aerospace circles regarding the viability of space-based mining, emphasizing that the economic potential hinges heavily on initial technological choices and scalable economic factors.

Employing a "spherical cow model," the study abstracts and simplifies the myriad variables affecting space industry development to identify the macro-economic parameters likely to drive or inhibit the sustainable growth of a space-based propellant sector. It takes into consideration such variables as economies of scale, cost of reliability, and learning curves, as well as examining how these interact with one another and with the lunar mining business case. Crucially, the results challenge the prevailing notion that in-space resource utilization (ISRU) is inherently disadvantaged by the cheaper, reusable launch systems developed on Earth.

Metzger's work indicates that investment in space mining technologies is justified not only in terms of potential cost savings but due to anticipated future market expansions. By prioritizing improved reliability and modular designs, forecasting learning curve impacts, and optimizing mass-specific factors, the paper outlines a path forward for businesses and policymakers to effectively harness this potential. Furthermore, an emphasis is placed on the strategic development of public-private partnerships as a tool to mitigate the initial financial risk associated with nascent space industry initiatives.

The paper's rigorous economic modeling provides a timely framework as governments and private entities globally are increasingly looking toward lunar resources as a critical component of expansive space development agendas. It effectively consolidates existing viewpoints and empirical data, presenting a coherent narrative that lunar propellant can indeed compete on economic grounds with terrestrial sources in the long run.

This paper presents a foundational perspective for future empirical and theoretical research strategies, particularly emphasizing the importance of selecting technological pathways that maximize efficiency and learning potential. The study calls for further innovation in both space policy and technology development to support these objectives, particularly in resolving the remaining hurdles associated with lunar environmental conditions and the reliability of equipment.

Overall, Metzger’s research contributes significantly to the ongoing discussion regarding lunar mining and ISRU, suggesting viable paths for future development that promise not just competitive parity, but long-term competitive advantage.