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How Space Technology Can Accelerate Net Zero Goals

Space-based technology has become one of the most powerful tools in tackling the global challenge of climate change and decarbonisation. From Earth observation satellites that monitor greenhouse gas emissions to advanced propulsion systems that reduce launch footprints, innovation in space technology is critical to achieving net-zero targets.

For SMEs and scale-ups in Europe and the UK, this sector offers a dual opportunity: driving technological breakthroughs while accessing substantial public and private funding. Yet navigating this landscape requires strategic insight. Each scheme has unique compliance demands, funding structures, and cross-border implications, and CFOs face increasing pressure to align innovation spend with decarbonisation goals while ensuring strong ROI.

This article provides a comprehensive roadmap of the funding available across Europe and the UK, from the European Space Agency (ESA) to Horizon Europe and national schemes. It also highlights the CFO pain points in financing innovation, and explains how FI Group’s “Global Reach. Local Expertise.” approach enables clients to maximise returns while reducing compliance risks.

 

Comparison of Major Funding Programmes

Programme	Budget (2021–2027)	Focus Areas	Typical Funding Size	Relevance to Space Decarbonisation
Horizon Europe	€95.5bn	Climate, Energy, Digital, Space	€500k–€15m	Collaborative R&D, space-enabled sustainability
EIC Accelerator	€10bn (subset of Horizon)	Deep-tech, disruptive innovation	Up to €2.5m grant + €15m equity	Hardware/software scale-ups in climate & space
ESA Clean Space	€180m+ since 2010	Green design, debris mitigation	€50k–multi-million	Clean propulsion, eco-satellites, reusability
LIFE Programme	€5.43bn	Environment & climate action	€1m–€10m	Climate services, space-enabled adaptation
UK Space Agency	£100m+ annual calls	Space science, sustainability	£50k–£15m	National missions (e.g. CO₂ monitoring)
Innovate UK Net Zero	£1bn+ portfolio	Clean energy, mobility, data	£50k–£2m	Satellite data for net-zero mobility, energy

 

What is Space Technology for Decarbonisation?

Space technology for decarbonisation refers to the application of space-based tools and services to reduce carbon emissions, improve resource efficiency, and accelerate the transition to net-zero economies. Examples include:

• Earth Observation: Satellites providing real-time data on emissions, deforestation, and ocean health.
• Green Propulsion: Development of non-toxic, sustainable fuels for satellites and launchers.
• Energy Infrastructure: Space-based solar power and satellite-enabled grid optimisation.
• Supply Chain Monitoring: Using satellite data to verify carbon reduction claims in global trade.
• Climate Modelling: Advanced sensors that feed into predictive models for policymakers and businesses.

This convergence of space, sustainability, and digital technology creates new commercial opportunities but requires significant upfront investment, hence the growing importance of grant funding and R&D tax incentives.

 

Why CFOs Must Pay Attention

CFOs in innovation-driven SMEs face three recurring challenges:

1. Balancing long-term innovation with short-term cash flow
   Developing decarbonisation tech often requires large upfront spend on prototypes, testing, and compliance, with delayed revenue realisation.
2. Navigating fragmented funding ecosystems
   EU, ESA, Innovate UK, and private funds all have different eligibility rules, reporting standards, and audit risks.
3. Avoiding opportunity costs
   Missing out on grants or misaligning R&D incentives across borders can cost millions, not just in lost funding, but in lost competitive advantage.

In a climate where venture capital funding has declined year on year since 2021, grants and tax incentives are becoming the most reliable growth levers for high-tech firms.

 

Funding Opportunities in Europe

European Space Agency (ESA)

The ESA runs multiple programmes aligned with sustainability and space innovation:

• ESA’s ARTES (Advanced Research in Telecommunications Systems) – supports SMEs developing satellite-enabled services for climate monitoring, smart cities, and mobility.
• ESA Clean Space Initiative – focuses on eco-design, debris mitigation, and clean propulsion.
• ESA Technology Development Element (TDE) – funds feasibility studies and prototypes with applications in decarbonisation.

ESA grants often require international collaboration, making FI Group’s network across 13 countries a decisive advantage in forming and managing consortia.

Horizon Europe

With a €95.5 billion budget (2021–2027), Horizon Europe is the EU’s largest funding programme for research and innovation. For space decarbonisation, key clusters include:

• Climate, Energy & Mobility – funding projects in clean aviation, sustainable fuels, and renewable integration.
• Digital, Industry & Space – supporting satellite manufacturing, AI-driven Earth observation, and next-gen propulsion.
• Missions on Climate-Neutral Cities and Oceans – creating opportunities for space-enabled monitoring solutions.

The European Innovation Council (EIC) Accelerator within Horizon Europe also offers up to €2.5 million in grants plus blended finance, particularly relevant for scale-ups in green and space technologies.

Other EU Initiatives

• LIFE Programme (€5.43bn): Focused exclusively on environment and climate action.
• Clean Hydrogen Joint Undertaking (Clean H2 JU): €2bn for hydrogen innovation, often linked with space propulsion and storage systems.
• Digital Europe Programme (€7.59bn): Funding for AI and cybersecurity in satellite data processing.

 

Funding Opportunities in the UK

Innovate UK

The UK’s national innovation agency Innovate UK regularly opens competitions relevant to space and decarbonisation, such as:

• National Space Innovation Programme (NSIP) – supporting space data and climate applications.
• Net Zero Mobility and Aviation Calls – investing in clean propulsion and aircraft electrification.
• Smart Sustainable Plastic Packaging – relevant for supply chains where satellite monitoring validates sustainability claims.

UK Space Agency

Through targeted calls, the UK Space Agency co-funds ESA projects and runs initiatives on space debris mitigation and low-carbon satellite technologies.

 

Combined Approach: R&D Tax Relief + Grants

For UK SMEs, R&D tax relief remains a crucial complementary mechanism. Costs not covered by grants can often be claimed under the merged R&D Expenditure Credit (RDEC) scheme, offering a ~20% taxable credit on qualifying costs. CFOs must carefully structure projects to avoid “double-dipping”, where the same cost is claimed twice under different schemes, a compliance risk that FI Group’s integrated advisory model helps mitigate.

Private and Venture Funding Landscape

While venture capital remains the largest pool of growth finance, the market has cooled significantly since 2021. UK deal volumes have fallen, though average deal sizes remain larger than a decade ago, with deep-tech and life sciences attracting outsized interest.

For space decarbonisation, this means CFOs should see public funding as a hedge against VC volatility. Grants de-risk early-stage projects, making companies more attractive to private investors down the line.

Roadmap for SMEs and Scale-Ups

For SMEs considering entry into the space decarbonisation ecosystem, a structured roadmap is critical:

1. Map Your Innovation Pipeline
   Identify which projects align with decarbonisation priorities (e.g. propulsion, data analytics, monitoring).
2. Select the Right Funding Mix
   Combine grants, R&D tax relief, and where possible, blended finance instruments.
3. Form International Consortia
   Particularly for Horizon Europe and ESA projects, partnerships improve eligibility and competitiveness.
4. Align Reporting and Compliance
   Different jurisdictions have different audit risks; early planning avoids costly delays.
5. Leverage Expert Support
   Engage advisors who understand both the technical innovation and the financial compliance.

 

The FI Group Advantage

At FI Group, we turn complexity into clarity for innovation leaders. With over 1,400 experts across 20 countries, we support more than 15,000 clients annually, securing over €1.7bn in funding.

Our advisory goes beyond funding applications. We help CFOs and executives:

• Mitigate compliance risk by ensuring claims are audit-ready across jurisdictions.
• Optimise funding strategy through a single-point-of-contact model.
• Accelerate international expansion, bridging HQ strategy with local execution.

As Dr. Fawzi Abou-Chahine, Funding Director at FI Group UK, explains:

“We support clients to navigate the most competitive EU and UK schemes. Our role is not just to write applications, but to align funding with strategic goals, whether that’s scaling internationally, strengthening IP portfolios, or accelerating net-zero innovation.”

International Landscape: Global Reach, Local Expertise

Innovation does not stop at borders. Space and decarbonisation projects often require cross-continental collaboration, from launch facilities in South America to data analytics hubs in Europe and Singapore.

FI Group’s model ensures that:

• Your HQ sees the full picture, while your teams feel local support.
• Global operations don’t need global headaches.
• We deliver seamless international compliance, reducing risk in multi-country claims.

This capability is critical during M&A, supply chain shifts, and expansions where funding incentives vary widely across jurisdictions.

 

FAQs

What is the main funding source for space decarbonisation projects in Europe?

The European Space Agency and Horizon Europe are the leading sources, with additional opportunities under LIFE, Clean Hydrogen JU, and Digital Europe.

Can SMEs combine R&D tax relief with grant funding?

Yes, but careful structuring is needed to avoid claiming the same cost twice (“double-dipping”). FI Group helps ensure compliance with HMRC and EU rules.

How competitive are Horizon Europe calls?

Horizon Europe success rates average 10–15%, but consortium-based applications led by SMEs with strong partners see higher success.

What are CFO pain points in managing international incentives?

CFOs struggle with fragmented regulations, audit risk, and inconsistent reporting across jurisdictions. Integrated advisory support mitigates these challenges.

Why work with FI Group?

Because we combine global scale with local expertise, securing over €1.7bn in funding annually and offering tailored support for space and decarbonisation innovators.

 

IT innovation isn’t limited to the digital sphere. Increasingly, industrial applications of technology are pushing the boundaries of what’s considered R&D. 

When businesses use technology to solve operational, logistical, or energy challenges in new ways, they’re often venturing into innovative territory.  

Some examples might include: 

 

• AI-powered logistics route optimisation based on real-time conditions
• Development of smart warehouse automation tools
• Creation of new communication devices for confined or hazardous environments
• Software platforms managing energy distribution via smart grids
• Predictive systems for inventory management based on dynamic variables
• Advanced tools for risk modelling and pricing analysis
• User behaviour analytics that predict purchase likelihood or engagement patterns

 

In these cases, the technology isn’t just supporting the business, it’s reshaping how the business operates, opening the door to R&D qualification. 

 

What Exactly Counts as R&D? 

 

At its core, R&D is about creating value through new knowledge or novel applications of existing knowledge.  

Projects generally fall into one of three key categories: 

 

• Scientific Research: Activities that generate new knowledge, whether through fundamental or applied exploration.
• Technological Development: Projects that translate knowledge into concrete solutions, products, or prototypes.
• Technological Innovation: Significant improvements or entirely new methods, processes, or systems, often involving novel technologies or methodologies.

 

While these categories may sound academic, the reality is that many IT and digital transformation projects can fall within their scope. 

 

Where Tech Meets R&D: Common Eligible IT Initiatives 

 

Digital innovation is a fast-moving field, and many solutions that tackle complex challenges could meet the criteria for R&D recognition.  

For instance: 

 

• AI systems used for fraud detection or risk assessment
• Implementation of advanced frameworks to improve software performance
• Blockchain technologies ensuring data transparency and traceability
• Immersive tech applications in industrial or training environments
• Predictive analytics or machine learning models based on real-time data
• Automated asset management and intelligent resource planning
• Cloud-based cybersecurity solutions beyond traditional perimeter defences
• Algorithm development and mathematical modelling for smart engines
• Scalable cloud platforms tailored to new services or users
• Innovative approaches to integrated delivery management

 

These aren’t just examples of digital progress, they’re potential R&D projects with real business impact and tangible fiscal benefits. 

 

Hispanic America as a case study: Tax Incentives in Peru  

 

In a world where innovation drives competitive advantage, research and development (R&D) is no longer a luxury, it’s a strategic position. 

Around the globe, companies are investing in knowledge-based growth to stay ahead of the curve. In Peru, this global trend is taking on a particularly promising form: tax incentives designed to encourage and reward innovation. 

But how do you know if your project qualifies?  

Could your next technology initiative not only advance your operations but also reduce your tax burden? 

 

The R&D Advantage: A Strategic Incentive 

 

The power of innovation to shape sustainable economic development must be recognised, and in the case of Peru, for example, a specific tax incentive has been introduced: 

• Law No. 30309: companies that invest in scientific research, technological development and technological innovation projects can deduct the expenses incurred on their tax return.  

This innovative regulation offers additional income tax deductions to companies that invest in scientific research, technological development or technological innovation. 

It’s not just about rewarding great science or complex engineering, it’s about promoting a culture of innovation in which experimentation, development and improvement are actively supported. 

 

Do you have questions about whether your project can qualify for the R&D criteria? 

 

Here are some questions we suggest you ask yourself: 

– Are you solving a technical problem with no clear solution at the outset? 

– Does it involve a significant advance in either what is being done or how it is being done? 

– Are you experimenting with untested ideas or developing new methodologies? 

– Is there a measurable element of uncertainty or technical risk? 

– Will you generate knowledge that did not previously exist in your company, sector or region? 

– Are you applying existing technologies in innovative ways? 

 

If you can confidently answer ‘yes’ to several of these questions, there’s a good chance your project will qualify, and it may be time to explore your eligibility for R&D tax benefits or other innovation-centred incentives. 

 

With a global vision and clients around the world, FI Group specialises in the technical and legal criteria of R&D classification, monitoring the entire process. Our teams of experts combine technical knowledge and strategic vision to ensure that your projects meet the necessary standards and have the best chance of success. 

 

Remember: your innovation today can generate tax benefits tomorrow. 

The European Commission has published the latest edition of the 2025 European Innovation Scoreboard (EIS), confirming a positive long-term trend in the EU’s innovation capacity. Since 2018, the European Union’s innovation performance has grown by 12.6%, reflecting efforts to strengthen R&D ecosystems, promote public-private collaboration, and accelerate digitalization. 

 

Although the most recent data show a slight slowdown (with an average decline of 0.4 points between 2024 and 2025), the overall outlook remains positive. All Member States have improved since 2018, with especially notable progress in key countries such as Spain, Belgium, Italy, Germany, and Portugal, where innovation ecosystems have continued to strengthen alongside a sustained commitment to public-private collaboration and business-driven R&D. 

 

In Spain, several regions stand out for exceeding the European average: 

Catalonia, the Basque Country, Madrid, Navarre, and the Valencian Community, consolidating themselves as competitive innovation hubs at the European level. 

 

The 2025 Regional Innovation Scoreboard (RIS) presents a mixed but converging picture. Between 2018 and 2025, 233 out of 241 European regions improved their innovation performance, narrowing the gap between the most and least advanced areas. However, 82 regions recorded a decline between 2023 and 2025, highlighting a recent slowdown in some territories and underlining the need to reinforce policies that enhance competitiveness across all regions. 

 

The European Innovation Scoreboard is not just a statistical report; it is a strategic reference tool for guiding public policy, planning investments, and supporting business decision-making. Its integration into the New European Innovation Agenda further strengthens its strategic role, helping to reduce disparities among countries, promote collaboration, and accelerate the adoption of cutting-edge technologies. 

 

It also supports initiatives such as: 

1. The Competitiveness Compass. 
2. The Choose Europe campaign to attract investment and talent. 
3. The forthcoming EU Innovation Law, which will use these indicators to plan reforms and modernize national R&D&I systems. 

 

In a context of growing global competition and the urgent need for sustainable transformation, companies must take advantage of the funding and innovation incentives available. The strengthening of the European innovation ecosystem creates a favourable framework for: 

1. Accessing national and EU R&D&I funding. 
2. Collaborating with research centers and startups.
3. Developing innovative projects that enhance competitiveness. 

 

At FI Group, we have teams specialized in funding programs, offering comprehensive support that covers everything from idea conceptualization, project definition, to fostering collaborations and coordinating proposals.  

 

We accompany our clients throughout the entire project lifecycle, up to the final closure by the administration, including: 

1. Preparation of funding proposals. 
2. Interaction with institutions. 
3. Dossier management. 
4. Project justification. 
5. Audit support. 

 

We turn opportunities into tangible results. With a strong presence across Europe and deep expertise in EU funding programmes, we support businesses in identifying and securing resources for innovation-driven projects.  

If your organisation is looking to enhance its competitiveness through strategic innovation, explore how we can assist you via the EU Grants.  

Talk to our experts and turn your ideas into real impact: Request a Free Audit