'Crunch time'

A cascade of climate-driven extremes in recent months -- from floods in Pakistan and Nigeria to heatwaves and droughts across the world -- have shone a spotlight on the ferocious impacts of a warming world for emerging economies, as well as small island states threatened by sea level rise.

The G77 and China bloc of 134 developing countries launched an opening gambit on loss and damage this week, with a proposal to create a fund at COP27, with operational details to be agreed later.

Pakistan's climate minister Sherry Rehman, whose country chairs G77+China, told delegates on Friday they were willing "to find common ground".

A compromise response from the European Union, proposed late Thursday, suggested a fund specifically for the most vulnerable nations saying the money should come from a "broad funder base" -- code for countries including China and Saudi Arabia that have become wealthier since they were listed as developing nations in 1992.

"I have to say this is our final offer," European Commission Vice President Frans Timmermans told reporters on Friday morning.

But with countries still unable to come to an agreement, Britain and several other nations circulated a new draft proposal document, seen by AFP and confirmed by a source close to the negotiations, which suggested the fund could be part of a range of "funding arrangements".

The document, which has not been formally submitted to the UN process, suggested the new source of monies could be operationalised in two years.

This would "only agree some ambiguous funding arrangements that kick the can down the road" said Mohamed Adow, of the think tank Power Shift Africa.

One key country, the United States, has remained discreet, although a State Department spokesperson confirmed the parties are continuing to negotiate.

"It's crunch time," Rachel Cleetus, lead economist at the Union of Concerned Scientists' climate programme, told AFP. "There's no time anymore for the US to sit on the sidelines."

She said the United States and China, the world's two biggest polluters, "can really unlock this" in view of a thaw in climate relations following a meeting between Presidents Joe Biden and Xi Jinping earlier this week in Bali.

That may be complicated by confirmation late Friday that US climate envoy John Kerry had tested positive for Covid-19 and was self-isolating.

His spokesperson Whitney Smith said he was continuing to work with his team "and foreign counterparts by phone to ensure a successful outcome of COP27".

Heating up

Canadian Environment Minister Steven Guilbeault told reporters earlier that countries were "close" to an agreement on loss and damage but that "the funds should include all large emitters, which would include a country like China, and Saudi Arabia and Qatar".

Timmermans said he had explained the EU proposal to US delegates who were "very interested in seeing" the 1.5C target reaffirmed.

Vulnerable nations and many wealthy emitters have stressed the need to maintain the 1.5C goal, while observers are calling for stronger language in the final COP27 statement on curbing planet-heating fossil fuels.

Even with new commitments, the world is on track to heat up by about 2.5C by the end of the century -- enough, scientists say, to trigger dangerous climate tipping points.