The UN climate talks entered its fourth day on Thursday amid mounting optimism about the Green Climate Fund (GCF) which would oblige industrialized countries to financially aid developing countries in dealing with climate change.
Efforts to negotiate a deal hit snags after U.S. rejected a proposal on how to raise 100-billion-dollars earmarked for poor countries to develop low-carbon economies and deal with the effects of global warming.
Debate on setting up the fund started on Wednesday at COP 17, or formally the 17th Conference of Parties to the United Nations' Framework Convention on Climate Change (UNFCCC).
There has been no sign that conflicting parties would make any compromise.
The current round of talks probably would not solve the issue, South African Environment Minister Edna Molewa indicated.
The "sources of funds aspect" of the climate fund would probably leave for the next round of climate talks next year in Qatar, she said.But she told reporters that "we are still confident we are on track to (make operational) the Green Climate Fund."
"The discussion on sources of funds still needs to take place, and by COP 18 we should have some progress," she said.
What was being brought into operation was a "shell" climate fund, she said.
But Molewa warned against making too much of some pronouncements by countries on issues as it was still very early and "negotiations have just begun".
By the end of the week, a clearer picture would emerge, she said, adding 'Things are going smoothly; we are on track."
The GCF was agreed to at COP 16 in Cancun, Mexico last year. It requires developed countries to provide 100 billion dollars to poorer countries by 2020 to help them cope with carbon emissions and adapt to climate change.
Earlier this week, the U.S. reiterated its rejection to the fund, citing concerns about how the money would be raised. The U.S. wants more involvement of private businesses in the fund.
The draft raises "substantive concerns" and contains "errors and inconsistencies," said Jonathan Pershing, a State Department envoy leading the U.S. delegations. He didn't elaborate his concerns.
Making the case more complex was reservation from some Latin American countries. In Wednesday's debate, some Latin American countries said they felt "deepest alarm" that the fund would take the world on a route "diametrically opposed" to the principles of the UN Framework Convention on Climate Change. It, like the U.S., called for "a process" to discuss elements of the draft architecture.
The draft plan would hurt developing countries' access to resources, said ALBA, which groups Bolivia, Venezuela, Nicaragua and Ecuador.
Canada and Saudi Arabia also have voiced reservations about signing off on the fund.
These reservations broke the broad consensus that the draft fund, while imperfect, could be adopted and operational soon after next year's talks, in Qatar, observers say.
The Alliance of Small Island States (AOSIS), which includes some of the world's lowest-lying and most vulnerable countries, said it was not satisfied with some of the principles in the draft document, but that it should be adopted "without delay".
The G77+China, which supports the GCF, said the fund was a "crucial element to the solution of global (climate change) problems".
Establishing the fund "is a benchmark for the success of the Durban conference," Chinese chief negotiator Su Wei said.
The G77+China was "hard at work" to ensure the Durban talks delivered a favorable decision on the fund.
The GCF also has the backing of the powerful 27- member European Union negotiating bloc, least-developed countries, and the Environmental Integrity Group made up of Mexico, South Korea and Switzerland.
Negotiations at COP 17 on the GCF are not about to fall apart, said Molewa, the South African Environment Minister.
She said the South African delegation, which she heads, remained engaged in the negotiations.