Climate talks end with modest steps but no Kyoto deal

CANCUN, Mexico (Reuters) - The world’s governments agreed on Saturday to modest steps to combat climate change and to give more money to poor countries, but they put off until next year tough decisions on cutting greenhouse gas emissions.

The deal includes a Green Climate Fund that would give $100 billion a year in aid to poor nations by 2020, measures to protect tropical forests and ways to share clean energy technologies.

Ending a marathon session of talks in the Mexican beach resort of Cancun, almost 200 countries also set a target of limiting a rise in average world temperatures to below 2 degrees Celsius (3.6 F) over pre-industrial times.

There was, however, no major progress on how to extend the Kyoto Protocol, which obliges almost 40 rich nations to cut greenhouse gas emissions.

The failure to resolve the central problem of emissions dismayed environmental groups. It was also unclear how the $100 billion a year for the Green Climate Fund will be raised.

The first round of Kyoto expires in 2012, it does not include China and the United States -- the world’s two biggest emitters -- and there is no consensus over whether developing countries should have binding targets to cut emissions or whether rich countries have more to do first.

The main success in Cancun after two weeks of talks was simply preventing the collapse of climate change negotiations, promoting support for a shift to low carbon economies and rebuilding trust between rich and poor countries on the challenges of global warming.

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Major players were relieved there was no repeat of the acrimonious failure seen at the Copenhagen summit last year, but they warned there was still a long way to go.

“The most important thing is that the multilateral process has received a shot in the arm, it had reached an historic low. It will fight another day,” Indian Environment Minister Jairam Rameshtold Reuters. “It could yet fail.”

“We have a long, challenging journey ahead of us. Whether it’s doable in a short period of time, to get a legally binding deal, I don’t know,” the European Union’s climate commissioner Connie Hedegaard said of a deal beyond 2012.

U.S. President Barack Obama said the Cancun meeting was a success and advances the world’s response to climate change.

Carbon offset markets worth $20 billion depend on Kyoto emissions caps to drive developed countries to pay for cuts in greenhouse gases in developing nations as a cheaper alternative to cutting their own greenhouse gases.

The Cancun agreement would “build upon” such markets, giving them some support despite the doubt over Kyoto itself.

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Abyd Karmali, global head of carbon markets for the Bank of America Merrill Lynch said the deal lays the foundation for progress.

“Now that countries’ emission reduction targets are enshrined in the new Cancun Agreement, it is critical for countries to move forward with their domestic policies and measures,” he said in a research note.

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The agreement reached on Saturday set no firm deadlines for an elusive legally binding accord on Kyoto. The next major global climate talks will be in South Africa at the end of 2011 and ministers will not meet on Kyoto before then, although lower-level negotiations are possible.

China’s top climate negotiator, Xie Zhenhua, said the agreement shows the Kyoto Protocol is still alive.

“At the South Africa conference, we’ll undertake discussions and negotiations over the substantive content of the second commitment period of the Kyoto Protocol,” he said, adding that developing countries hoped for further progress on the issues of funding, technology and protecting forests.

Japan, Canada and Russia had earlier this week said they would not extend Kyoto, demanding instead that all major emitters including the United States, China and India join in a new global deal.

Developing nations insist that rich Kyoto countries, which have burned the most fossil fuels since the Industrial Revolution, must extend the agreement beyond 2012 before the poor agree to measures to curb their emissions.

The Cancun talks were held as evidence of global warming mounted. Michael Jarraud, the head of the U.N.’s World Meteorological Organization, told the conference that this year could be the warmest year since records were first kept in 1850. It also caps a record-warm decade.

Environmentalists worry that global leaders are not moving fast enough to tackle the big climate issues.

“Cancun may have saved the process, but it did not yet save the climate,” said Wendel Trio, Greenpeace’s international climate policy director.

Britain’s energy and climate secretary, Chris Huhne, said the advances in Cancun made it more likely that the European Union would toughen cuts in greenhouse gas emissions, to 30 percent below 1990 levels from a current 20 percent.

“I think it definitely makes an agreement on 30 percent in the EU more likely,” he said.

Bolivia’s left-wing government was alone in objecting to the Cancun accord. It had demanded far deeper cuts in greenhouse gases by rich nations and accused them of “genocidal” policies causing 300,000 deaths a year.

Under the U.N.-led negotiations, all agreements are supposed to have consensus support, but Bolivia was sidelined with the accord simply noting its concerns.

Additional reporting by Timothy Gardner, Patrick Rucker and Christopher Buckley; Writing by Russell Blinch, Editing by Kieran Murray