Despite progress, Copenhagen is on brink of "farce", Miliband warns

The Copenhagen summit remains on a knife edge this morning as negotiators warned openly for the first time that continuing wrangling over the structure of any deal could result in the collapse of the talks.

Yesterday saw progress on a number of fronts, with fresh funding pledged for rainforest protection, the tabling of a compromise funding plan by Ethiopian prime minister Meles Zenawi that secured the support of the EU and others, and indications of a mild thawing of relations between the US and China.

However, the good news was overshadowed by the continuing row between rich and poor nations over how the draft agreement should be structured and whether or not the Kyoto Protocol should be retained.

The EU, Japan and the US now appear to openly argue that Kyoto should be replaced by a new treaty that better reflects the existence of those emerging economies that now account for a large chunk of global emissions. But the G77 group of developing countries is resisting fiercely any attempt to ditch Kyoto, arguing that it remains the only legally binding commitment from rich nations to cut their emissions.

Tensions are being raised further by the perception among many poorer countries that industrialised nations, and in particular the US, are refusing to offer emission cuts and funding commitments anywhere near what will be required to avoid dangerous levels of warming.

British energy and climate change secretary Ed Miliband warned late yesterday that the impasse over Kyoto could lead to the collapse of the talks, despite the fact that countries were closer than ever before to agreeing what should go in any treaty.

"It would be a tragedy if we failed to agree because of the substance, [but] it would be a farce if we failed to reach agreement because of process," he said. "People will find it extraordinary that this conference that has been two years in the planning and involves 192 countries, which is such an important thing, with such important stakes, is at the moment being stalled on points of order."

Danish prime minister Lars Lokke Rasmussen, who took over as president of the summit yesterday morning, attempted to break the deadlock by appointing 25 ministers to negotiate the draft text. But according to reports, those talks are now 18 hours behind schedule and there is increasing scepticism that world leaders will have a workable draft text to discuss when they begin to arrive in large numbers today.

However, the row over the draft documents overshadowed a number of breakthroughs, which ensure that some sort of meaningful deal can be agreed.

Prime minister Meles of Ethiopia proposed the formation of a new climate funding mechanism that would see poorer nations receive $50bn (£31bn) a year from 2015 and $100bn a year from 2020 to help them invest in low-carbon technologies and climate adaptation measures.

The proposal, which is in line with plans put forward by a number of industrialised nations, including the UK, was well received by richer countries, although there were protests from some poorer countries that they had been " sold out".

Meles admitted those countries calling for greater levels of climate funding would be disappointed, but insisted his compromise plan represented the best chance of a deal being done, adding that under the proposal poorer nations would be guaranteed a say in how the money is distributed. "My proposal dramatically scales back our expectation of the level of funding in return for more reliable funding and a seat at the table in the management of such a fund," he said. " Because we stand to lose more than others we have to be flexible."

He also proposed the formation of a new commission to report next year on how the increased funding should be raised. A number of different mechanisms will be analysed, including levies on the carbon market, carbon taxes on shipping and aviation, and a Tobin tax on bank transactions.

In addition, there were further indications that a deal on how to improve forest protection is close to completion after Australia, France, Japan, Norway, the UK and the US said that $3.5bn of the $30bn fast-track fund would be earmarked for investment in forestry projects.

Meanwhile, US senator John Kerry said he was "100 per cent" certain the US would pass a climate bill early next year should an agreement be reached at Copenhagen.

Kerry, who has been engaged in a bipartisan effort to secure support for the bill from moderate Republican senators, said the US would make good on its pledge to cut carbon emissions.

"With a successful deal here in Copenhagen, next year, the US Congress – House and Senate – will pass legislation," Kerry told the summit. "I will tell you right now, 100 per cent, we are going to pass major climate and energy legislation that is going to have an impact on emissions."

However, he insisted the US would not drop its demand for China and other emerging economies to accept independent verification of their efforts to cut the carbon intensity of their economies.

"To pass a bill, we must be able to assure a senator from Ohio that steelworkers in his state won't lose their jobs to India and China because those countries are not participating in a way that is measurable, reportable and verifiable," he said.

Chinese officials have said they will not submit to what could amount to an international inspection regime for carbon emissions. However, in an encouraging sign, chief Chinese negotiator Su Wei said that China would improve the quality and transparency of its own emissions reporting.

"I believe through these measures, we can see that China will only do better in terms of effectiveness, openness and transparency in implementing the goals we set," he said.

India's environment minister, Jairam Ramesh, told the Guardian that India was also willing to introduce improved emissions reporting mechanisms, but needed clearer indications from the US on what it wanted. "I keep telling Americans, let me have some transparency about the word transparency. What exactly is the word concerning?" he said, adding that the US had the power to move the talks forward by disclosing what it will offer in climate funding.

"If the US comes up with a generous financial offer, the chemistry of Copenhagen will entirely change," he said. "If the US puts a generous financial offer on the table, it can completely change the atmosphere but they can't do it on Friday morning when Obama gets here. They must change the atmosphere now."