Around 70 ministers took part in talks on Monday and Tuesday at the Emirates Palace, a luxurious resort in the United Arab Emirates capital Abu Dhabi, to hammer out details before next month's UN climate summit, the most important since the landmark Paris agreement in 2015.
"The main focus for the moment is clearly the loss and damage fund" for poorer nations hit by climate change, French Energy Minister Agnes Pannier-Runacher told AFP before the talks closed on Tuesday without a deal.
The previous round of negotiations in mid-October also ended in failure, with more talks scheduled from November 3-5 in Abu Dhabi.
Egypt's delegate to this week's talks, Mohamed Nasr told AFP "almost 80 percent of the text" is agreed, while an African negotiator who spoke on the condition of anonymity said that the "real battles" will be fought at COP28.
The agreement to set up a dedicated fund to help vulnerable countries cope with climate "loss and damage" was a flagship achievement of last year's COP27 talks in Egypt.
But countries left the details to be worked out later.
"I felt there was a lot of goodwill, constructive engagement, big debates and trying to find solutions," German climate negotiator Jennifer Morgan,told AFP, while admitting there's still "a lot to do in the next 28 days".
A series of talks this year have tried to tease out consensus on fundamentals like the structure, beneficiaries and contributors -- a key issue for richer nations who want China to pay into any fund.
"We were one or two days away from an agreement," said a European negotiator on condition of anonymity.
But several disagreements, including on beneficiaries, delayed a breakthrough.
"The United States does not want to put in a penny if China is a potential beneficiary," the negotiator said.
- 'Not fit' for funding -
Developing nations are demanding negotiators nail down the fund's operation, governance, location, contributors and beneficiaries, and a timeline for payouts, at the November 30-December 12 COP28 summit.
But many are sceptical of the willingness of rich countries to establish the fund, even temporarily, through the World Bank, which is "not fit for purpose for broader development issues," said Michai Robertson of the Alliance of Small Island States (AOSIS).
Meanwhile, Saudi Arabia does "not want any wording that would expand the list of donors beyond the developed countries", said the European negotiator.
Even if these hurdles are settled by COP28, it remains to be seen how much money rich countries are willing to supply.
In 2009, they pledged $100 billion of climate finance every year to developing nations, but failed to meet the 2020 deadline. There are hopes that goal will be met this year.
The loss and damage fund is based on voluntary contributions and is not an "obligation", Pannier-Runacher told AFP after chairing a Tuesday session on the fund.
The French minister said an agreement must be quickly reached to avoid turning the fund into a "pretext" to delay discussions on phasing out of fossil fuels.
- 'Strong views' -
COP28 will draw up the first official assessment of humanity's efforts to respect the 2015 agreement and its ambition to limit global warming "if possible to 1.5 degrees C" since the pre-industrial era.
For the first time, the world is flirting with the limit this year. The global climate, over several years, is considered to have already warmed by about 1.2C, accompanied by a procession of natural disasters.
In about 30 years of COP meetings, the only progress on hydrocarbons was a coal-reduction target at COP26, and there have been no decisions on oil and gas.
"I know there are strong views about the idea of including language on fossil fuels and renewables in the negotiated text," said COP28 president Sultan al-Jaber on Monday, calling on countries to find "common ground".
In closing remarks on Tuesday he said: "We need to get on with the work. There is no time for delay. We should use every single day between now and the beginning of COP28 to make progress on all the elements".
In July, Jaber, who heads UAE oil giant ADNOC, said that "phasing down fossil fuels is inevitable" -- a statement he has not repeated this week.
A fossil fuel phaseout is already implicit in other commitments, including one to triple renewable energy capacity to 11 terawatts by 2030.
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