Biz Dev Guy: We could make a preposterous amount of money from communications satellites.
Engineer: It will be expensive to build those, but even so, nothing compared to the cost of building the machines needed to launch them into orbit.
Biz Dev Guy: Funny you should mention that. It so happens that our government has already put $4 trillion into building the rockets and supporting technology we need. There's only one catch.
Engineer: OK, I'll bite. What is the catch?
Biz Dev Guy: Your communications satellite has to be the size, shape, and weight of a hydrogen bomb.
From Space Stasis, by Neal Stephenson for Slate
That about sums up Neal Stephenson's point. Our current space launch systems are descended from ammunition, and somewhere in there, because of that, they tend to be not fully reusable and expensive. Very, very expensive.
But there are alternatives. Stephenson speaks of "no shortage of proposals for radically innovative space launch schemes that, if they worked, would get us across the valley to other hilltops considerably higher than the one we are standing on now—high enough to bring the cost and risk of space launch down to the point where fundamentally new things could begin happening in outer space. But we are not making any serious effort as a society to cross those valleys. It is not clear why.".
Let's take a look at some of those proposals. For now, I'm only going to pick three, in increasing order of required R&D.
The Skylon is probably humanity's best bet for a fully reusable spaceplane. With scarce funding—the whole project is estimated to cost roughly $12 billion—Reaction Engines Limited, the British company behind the Skylon design, has been focusing on developing the SABRE engines required by the spaceplane. Engineering estimates suggest that the Skylon could bring launch costs down from ~$12,000 / pound to as low as $450 / pound, a 25-times improvement over current technologies.
Magnetic levitation launch assist
Another idea involves providing the launch vehicle with a kinetic energy boost at take off. The theory goes that if you can accelerate your launch vehicle to some starting velocity with an external system, then it will have to carry much less fuel to reach the desired orbital velocity, making your total system that much more efficient on the margin. The most popular idea for a launch assist system involves magnetically levitated sleds that the launch vehicle rides on. These sleds would be accelerated along a track to a final velocity of between 1,000 km/hr (as in the example linked in the title) and 10,000 km/hr. At the end of the boost phase, the tracks would angle upwards and the launch vehicle would shoot off, igniting its own engines, and propelling itself the rest of the way into orbit. If you can build such a system at high altitudes, you would gain additional efficiency from the thinner air at the launch site, so most such proposals involve building sites near Kilimanjaro or in the Ecuadorian highlands. It's important to note that your launch vehicle would still need some power of its own. Earth's dense atmosphere means that you likely couldn't launch your vehicle at orbital velocity right off the tracks. These systems would require more R&D effort than a spaceplane like the Skylon, but are still based on technologies that are only evolutionary steps above and beyond what we have today. The magnetic-levitation techniques, the rocket engines, and even the heat shielding have all been demonstrated at near the required performance, the main difficulty would lie in integrating them all into one system.
Space elevators are exactly what they sound like: a giant elevator cable, with little elevator cars running up and down it, reaching all the way into orbit. The tricky part of keeping such a structure taught and extended against the Earth's gravitational field is usually solved by tethering the far end to a captured asteroid, so that the center of mass of the elevator lies in geosynchronous orbit, and the centrifugal force of the whole assembly keeps it from collapsing. Undoubtedly, a space elevator is the most efficient form of launch technology I know of. The elevator cars don't have to carry any of their own fuel, and they can travel slowly enough up the cable that they don't need to worry about atmospheric drag. The result is that all of the energy required for moving cargo into orbit can be generated via a coal, natural gas, nuclear, or renewable energy plant on the ground (the most efficient form of energy production), carried up the cable to the car in the form of electricity, and immediately used to put to work against the Earth's gravity by simple, and very efficient, electric motors. The trouble with space elevators, however, comes from the required strength of the materials that would make them. Because of the Earth's relatively strong gravity, we would require carbon nanotubes to build such a device for our planet. Unfortunately, the current record-longest nanotubes measure only centimeters long, a far cry from the thousands of miles that a space elevator must stretch. But once we've tackled that problem, I expect that space elevators will open up orbit like never before.
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