By Barbara Lewis and Nina Chestney
DURBAN, South Africa (Reuters) - Economic crisis and the top three polluters China, the United States and India, loomed as obstacles to a new global deal at the start of a second make-or-break week of U.N. climate talks in the South African city of Durban.
After a first week of preliminary discussion, serious doubt hangs over the future of the Kyoto Protocol, whose first commitment period on tackling climate change expires at the end of next year.
The other major issue for debate is how to drum up finance to help poorer nations adapt to a warmer planet, while the developed world wrestles with sovereign debt problems.
China, the world's biggest carbon emitter, gave a lift to the climate talks at the end of last week by suggesting it might sign up to a legally-binding deal to cut emissions, but it has set conditions.
"China has talked about a legally binding deal after 2020. The question is if China will be legally-bound. That would be interesting," EU Climate Commissioner Connie Hedegaard said.
China failed to answer that question at a news conference and a European diplomatic source said it was bluffing.
"There's no way China will sign up legally, but it doesn't want to be blamed if the talks fail," the source said, asking not to be named.
China's conditions include that other big emitters sign up and that finance is provided under a Green Climate Fund agreed at talks last year in Cancun, which aims to channel up to $100 billion a year by 2020 to help developing nations.
The U.S. special envoy for climate change Todd Stern said China's conditions were not acceptable.
"In order for there to be a legally-binding agreement that makes sense, all the major players are going to have to be in with obligations and commitments that have the same legal force," Stern said.
"That means no conditionality, no condition of receiving the financing, no trap doors, no Swiss cheese (with holes) kind of agreement."
In the United States, the second largest global emitter, environmental issues have become a flashpoint for argument between President Barack Obama's Democrats and the Republicans. A reluctant upper house, which failed to pass a climate bill last year, would block any deal to revive Kyoto.
The United States signed, but did not ratify Kyoto. One of its issues is that the boundaries between developed and developing nations have shifted and all big emitters should now be included on an equal basis in any new agreement.
India, the third biggest carbon emitter, has also stated it is not ready for a new binding agreement.
It argues its economic development is not as strong as China's and it should not be asked to take on legal targets for cutting emissions.
Neither India nor China is included in the goals set under the first commitment phase of the Kyoto Protocol, as they were regarded as developing when it was adopted in 1997.
The European Union has sought to take a lead in breaking the deadlock by promising to back a new agreement, but it too has a condition. It wants guarantees, which it has labeled a road map, that other big emitters will sign up too.
"Europe only accounts for 11 percent of global emissions, therefore a second commitment period with only Europe and a few other countries, it's hard to see how anybody could label that a huge achievement for the climate," Hedegaard said.
FOCUS ON ECONOMIC CRISIS
Europe's leadership has been undermined by the huge strain it is under from a sovereign debt crisis that is threatening to destroy the euro.
It is hoped a credible plan to prop up the single currency will emerge at an EU summit on Friday, also the last day of the UN climate talks in Durban.
"Negotiators can't look for a new angle from prime ministers on Friday as they can't take their focus off the eurozone crisis," said Alden Meyer, director of strategy and policy at the Union of Concerned Scientists. "That's the only issue on the agenda."
Negotiators have said there is no longer time to get new commitments sealed before the Kyoto Protocol's commitment period runs out at the end of the year, so they are instead aiming to agree on when new commitments can be forged.
The EU's aim is for a deal by 2015 to take effect by 2020 at the latest. The Kyoto Protocol only came into force eight years after it was adopted.
The commitment period for the developed nations to cut emissions by a minimum of five percent is just one clause in the Kyoto Protocol, the companion legislation to the United Nations Framework Convention on Climate Change (UNFCCC).
Without a new commitment period, the rest of the related agreements remain intact, but do not enforce action on lowering emissions.
South Africa, as host to the climate talks, is keen for another Kyoto Protocol, but is aligned with nations arguing that historically it has been responsible for very little of the pollution that is overheating the planet.
Now, it is among those most vulnerable to drought and crop failure associated with a warmer climate.
Underlying the need for urgent action to cap further temperature change, a report UK Met Office report released in Durban on Monday forecast global temperature would rise between three and five degrees Celsius this century if emissions are left unchecked.
A study released on Sunday found that even in a weak global economy emissions, which hit record levels last year, were still rising.
(Additional reporting by Agnieszka Flak, Jon Herskovitz, Michael Szabo, Andrew Allan; editing by Philippa Fletcher)