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The US is refusing to sign off on a flagship global climate fund, as already fraught negotiations intensify ahead of next week’s UN climate summit and carbon prices plummet to an all-time low.

It was already feared that souring economic conditions and next year’s US presidential election would make it difficult for the UN summit – which opens on Monday in Durban, South Africa – to make headway on a new deal to tackle global warming before the main provisions of the existing Kyoto protocol climate treaty expire at the end of 2012.

But officials confirmed on Thursday that the US, backed by Saudi Arabia, has still not agreed to a blueprint for the Green Climate Fund. The fund is one of the few concrete measures to emerge from seven years of talks on how countries should share the burden of cutting greenhouse gas emissions, which scientists say risk raising average global temperatures to dangerous levels.

First mooted two years ago at the 2009 Copenhagen climate summit, the fund is supposed to channel “a significant portion” of the $100bn a year developed countries have promised to mobilise by 2020 to help developing countries fight climate change.

At the same time, the price of carbon permits in the European Union, whose members are the only wealthy countries still willing to offer conditional backing for a new phase of the Kyoto pact in Durban, crashed to record lows on Thursday.

The eurozone debt crisis is partly to blame for the price falls in the world’s largest emissions trading scheme, but a UBS analyst report saying “the scheme is not working” and will suffer from an oversupply of permits until 2025 has also unnerved traders.

The price of UN-based certificates of emission reductions (CER) fell on Thursday to an all-time low of €5.9, down more than 50 per cent since June. The price of European allowances (EUA) under Brussels’ six-year-old emissions trading scheme fell too to a record low, hitting €7.80, below the previous low of €8.05 set in February 2009. EUA prices have fallen 15 per cent this week.

As a result the EU, one of the most critical cheerleaders for a global deal in Durban, will be more open to charges from those opposed to an agreement that its own climate policies are inadequate.

The US, which has never ratified the Kyoto protocol, and Saudi Arabia dissented from the adoption of a report outlining how the Green Climate Fund should be designed in talks leading up to the Durban meeting that were co-chaired by former South African finance minister, Trevor Manuel.

The US wanted more work done on issues such as private-sector involvement in the fund, and which countries would contribute to it, while Saudi Arabia was worried about compensation for oil-producing countries for revenues lost as a result of climate change actions, according to observers at the talks.

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