Environment ministers from more than 180 countries were arriving in Bali this weekend for a second week of climate change talks as a stand-off emerged between the main negotiating blocs.

The UN-sponsored talks are a vital first stage in drawing up a new agreement to cut greenhouse gas emissions after the Kyoto protocol expires in 2012.

But Europe and America are at loggerheads over carbon trading, China and India disagree with both Europe and America over making any cuts in their soaring carbon emissions and the US is flatly refusing to contemplate initiatives that could help Russia become a superpower once again.

At the heart of the discussions is the question of how to replace or upgrade the Kyoto treaty, which was drawn up in 1992, adopted in 1997, came into force in 2005 and expires in 2012. Since it was agreed, evidence of climate change has mounted and its provisions are now seen as far too weak.

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BACKGROUND

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BACKGROUND

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Under Kyoto, industrialised nations were meant to cut emissions by an average of 5.2%. However, in the 15 years since it was signed, global greenhouse gas emissions have soared from the equivalent of 40 billion tons a year to about 50 billion tons.

The economies of China and India have boomed in ways never predicted in 1992 and the world population has grown by more than a billion. Scientific studies show that carbon emissions need to be cut by up to 80% by 2050 if the worst of climate change is to be avoided.

The treaty places most of the onus for cutting emissions on industrialised nations such as Britain and America. By contrast, developing nations, whose emissions are surging, are under no pressure to cut back. Bringing India and China into a new emissions regime is a major part of what the EU and America wants to achieve in Bali.

The developing countries, however, have made it clear that they will consider action only if it is largely funded by the industrialised nations that have caused most climate change and benefited from burning billions of tons of fossil fuels. Consequently, much of the discussion in Bali has been about paying for carbon reduction strategies in developing countries. There has been some progress.

There is huge disagreement, though, over carbon trading, whereby countries are given quotas for carbon emissions. If they emit too much they have to buy other countries’ surplus. If they emit less than their quota they can make money by selling what is left.

Britain and the EU believe carbon trading could allow Europe to cut emissions by up to 30%. America has, however, rejected the idea, pointing out that it would have to pay billions of dollars a year to developing nations just to buy enough carbon quota to keep its factories, homes and roads running.

One quirk of the Kyoto treaty is that Russia has billions of dollars worth of surplus carbon quota and US policymakers refuse to support a system that could generate billions of dollars of unearned income for Russia and so help accelerate its return to superpower status.

A spokeswoman for the UK delegation accepted that progress had been slow. She said: “The talks are designed to pave the way for an agreement to be signed in 2009. We still have a week of talks left and they should go faster when ministers are involved so there is still hope.”

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