(Adds comment from China)
* 'Loss and damage' mechanism creates rift at UN climate talks
* Climate finance long-standing contentious issue
* No clear roadmap expected on offering aid pledges
By Nina Chestney
WARSAW, Nov 20 Rich and poor were deadlocked on Wednesday over how to raise aid to help developing countries cope with the damaging effects of global warming, in a setback at United Nations climate talks in Warsaw seeking progress towards a 2015 accord.
Bolivia and other developing countries accused the rich of failing to show willingness to discuss aid or compensation for losses and harm due to global warming, such as rising sea levels or creeping desertification.
The two-week Warsaw talks, due to end on Friday, are trying to lay the foundations for a new global climate accord meant to be agreed in 2015 and enter into force from 2020.
"I think we will find a resolution, but we are still some distance apart," U.S. climate envoy Todd Stern said of calls by emerging nations for a mechanism to cover loss and damage.
The rich fear it would be costly and make them legally liable for droughts, heatwaves and storms.
For many poorer countries, the devastation caused by Typhoon Haiyan in the Philippines earlier this month has raised the urgency of compensation.
Global economic losses caused by extreme weather have risen to nearly $200 billion a year over the last decade and look set to increase further as climate change worsens, the World Bank said this week.
"The compensation that those countries require is something that is absolutely fundamental and crucial," said India's environment minister, Jayanthi Natarajan.
But many richer countries are reluctant to foot the bill and are focused on spurring growth in their stagnant economies.
"We cannot have a system where there will be automatic compensation whenever severe weather events are happening at one place or other around the planet," the European Union's climate commissioner, Connie Hedegaard, said.
MONEY, MONEY, MONEY
One of the most contentious issues at U.N. talks has long been climate finance, or money put aside to help developing countries cut emissions and adapt to a changing climate.
Industrialised nations have promised to raise the allocation to $100 billion a year by 2020 for developing countries, from $10 billion a year in 2010-2012.
The charity Oxfam has estimated that climate aid has totalled between $7.6 billion and $16.3 billion so far this year.
At the talks, Japan promised $16 billion over three years and on Wednesday Norway, Britain and the United States also pledged $280 million to sustain the world's forests.
Green groups complain that much of the funds are not new sources of finance and developing countries say there is no clarity on how and when new money will emerge.
"We see no roadmap for finance, only repackaged old money or money redirected from other budgets," said Dipti Bhatnagar at Friends of the Earth International.
Negotiators have set up a Green Climate Fund to channel some of the $100 billion but it is still empty and cannot deliver any money until the second half of next year, which is too late in the eyes of many developing countries.
Xie Zhenua, China's top climate change official, said developed nations had to decide a timetable and the size of their contributions to provide finance "as soon as possible."
The International Energy Agency has estimated that $1 trillion a year of additional investment is needed to 2020 for the energy sector alone to shift to and deliver cleaner sources.
"Much of the action is going to happen at the domestic level," said Jane Wilkinson, director of the Climate Policy Initiative, which has estimated that global climate spending fell 1 percent last year to $359 billion as an economic slowdown hit state and private-sector budgets.
Polish Environment Minister Marcin Korolec, presiding at the talks, lost his job on Wednesday in a cabinet reshuffle but will remain as host of the U.N. meeting. ($1 = 0.6210 British pounds) (Additional reporting by Susanna Twidale, Megan Rowling and Alister Doyle; Editing by Dale Hudson and Anthony Barker)