European pension funds should have access to a central bank-backed facility as a last resort to help them avoid the fire-sale of assets forced on UK pension managers by margin calls due to the falling gilt prices. European insurance companies and pension funds had to pay extra €50bn in margin over a 12-day period in March 2020 when markets panicked.

Dutch central bank is calling on the country’s pension funds to boost holdings of cash and other liquid assets and to report any need for fire sales of assets, to ensure that they can avoid the turmoil that hit the UK, where pension schemes rushed to sell assets in response to a drop in government debt prices that sparked collateral calls in hedging strategies.

Italy withdrew in 2016. The Energy Charter Treaty (ECT) protects energy investments by foreign companies. Three energy groups are suing three European governments over the closure of coal power plants. Spain is sued by renewable energy companies after it reduced the subsidies. A process to “modernise” the pact has been under way since 2018.

Sterling money market funds, which act as bank accounts for institutional investors, have gathered £53bn in just a fortnight as UK pension schemes rush to build liquidity defences against market volatility before the Bank of England’s emergency bond-buying programme ends. Managers of these funds anticipate large withdrawals related to LDI collateral calls.

Just replacing the H2 made from natural gas and coal with green H2 would require 143% of all the wind and solar installed globally to date. Add shipping, steel and energy storage, and it would require five times all the existing wind and solar installations – and that is before decarbonising the electricity supply or hydrogen use in heating and road transport.

The liquidity crisis of the UK gilts markets has put at risk the government initiative to use pension funds to drive economic the transition to a low-carbon economy. The UK approved a new type “long-term asset fund” for investments in illiquid assets from investors such as pension funds, but their capacity to be buyers of illiquid assets has now taken a blow.

Wind turbine manufacturers cut jobs as supply chain woes and higher prices for key materials bite. Turbine prices are locked in by customers years in advance. It is difficult for manufacturers to pass on higher costs. They are at risk of losing market share to Chinese competitors. New capacity added this year globally will be 94-95 GW the same as 2021.

A rush for cash by UK pension funds has weakened the UK corporate debt market and pushed up borrowing costs for companies. In future, businesses like Rolls-Royce could borrow in international markets, which would weaken trading in the sterling market further. The UK corporate debt market is already small compared with Europe’s.

LDI is superbly complex so no one understands it, with tricky collateral management and an orchestra of instruments from gilt total return swaps to gilt repo and inflation swaps. But within the British pension fund community, sceptics have largely been the exception and LDI has become widely adopted by most of the UK’s 5,200 defined-benefit pension plans.

Expand too slowly and manufacturers risk losing out on gigascale orders; expand too fast and risk failing to sell equipment from expensive gigafactories. A glut will make some manufacturers bankrupt, according to Norwegian analyst Rystad Energy. The demand will hover around 30-40% of the available production capacity between 2024 and 2030.

UK’s 5,200 defined benefit schemes use derivatives to hedge against moves in interest rates and inflation, which require cash collateral to be added depending on market moves. The sharp fall in the price of 30-year government bonds led to unprecedented demands for more cash. To raise the funds, pension funds sold assets, causing prices to fall further.

The UK’s green bond sale has already pulled in more than £24 billion of orders. The green bond last year drew a much heftier £74 billion orderbook. Yet bondholders have taken fright. 30-year bond yields are soaring above 5%. Green bonds pull in demand from specialist ethical funds. Yet this time the outlook for the UK will dominate investor thinking.