SHARM EL-SHEIKH — Global climate talks in Egypt headed into their second half on Monday with still plenty of uncertainty whether a breakthrough can be made toward reaching a substantial deal on combating climate change.

Participants found some encouragement from a handshake between U.S. President Joe Biden and China’s President Xi Jinping in their meeting on the sidelines of the G-20 summit in Bali, Indonesia. Tensions between the two nations — the world’s two biggest polluters, who need to be on board for any climate deal to work — have cast a shadow over the annual U.N. climate gathering, known as COP27.

Their meeting raised hope that the U.S. and China could resume their own climate talks, which Beijing paused to protest House Speaker Nancy Pelosi’s visit to Taiwan in August. At Monday’s meeting, Biden and Xi agreed to “empower key senior officials” on areas of potential cooperation, including tackling climate change — though it was not immediately clear whether that meant talks would resume.

Wael Aboulmagd, Egypt’s diplomat in charge of the COP27 negotiations, welcomed the decision out of Bali. “We hope that that will contribute, of course, to facilitating reaching agreement on the important issues that threaten, as I said, everyone. So it can only be a good thing,” he said.

U.N. Secretary-General Antonio Guterres, arriving in Bali, said, there was no way to address climate change “without the cooperation of all G-20 members and in particular without the cooperation of the two biggest economies, the United States and China.”

Still, deep divides remain at COP27, where after a one-day break tens of thousands of attendees, including delegates from nearly 200 countries, observers, experts, activists and journalists, returned to the conference zone in the Red Sea resort of Sharm el-Sheikh. The delegates must now hammer out a “cover decision,” an all-encompassing document that lays out the political goals and often gets named for the conference venue, like last year’s Glasgow Climate Pact.

One issue is the world’s commitment, reaffirmed in Glasgow, to limit the global temperature rise to 1.5 degrees Celsius (2.7 Fahrenheit). The United States, Britain and others are pushing for the Sharm el-Sheikh meeting to reiterate that goal and to urge countries to commit to emissions cuts needed to reach it, said Alden Meyer, a long-time observer of U.N. climate meetings with the environmental think tank E3G.

China and India, however are resisting, he said. “They clearly have buyers’ remorse about agreeing to it in Glasgow.”

Here again, COP27 participants were looking to the G-20 gathering in Bali and whether leaders there will stick to their commitment, also made last year, to the 1.5-degree climate goal. If there’s a push to drop it at the G-20, it would be a setback for climate change fighting and undermine the Sharm el-Sheikh gathering, Meyer said.

“What the two presidents decide in Bali will play directly into the endgame here in Sharm El-Sheikh,” he said of Biden and Xi.

Another major sticking point is the call for wealthy nations who benefited most from industrialization that contributed to global warming to do more to help poor countries who have contributed little to global emissions.

Negotiators released the first draft of a crucial agreement on the issue on Monday.

The draft contained two options that reflect the existing divide between rich countries which oppose the idea of compensation, and poor nations that are seeking the creation of a new fund for loss and damage from extreme floods, storms and other devastating effects of climate change. The latter are proposing that such a fund should be “operationalized no later” than November 2024. The former make no mention of a new fund but instead cite “the mosaic of funding arrangements for responding to loss and damage.”

Some delegates were already talking about the possibility of a walkout by developing nations unless demands for more aid to poor countries are met.

“Now rich countries need to play their part,” said Rachel Cleetus, policy director and lead economist at the Union of Concerned Scientists.

“So this is going to be the litmus test of success at this COP, at COP27, that we get this loss and damage finance facility agreed here and that it’s up and running in two years,” Cleetus said at a press briefing.

Guterres said he was encouraged by some countries’ declarations that they would contribute funds, “but it’s still early to know whether these (loss and damage) objectives will be – or not – reached.”

The Group of Seven leading economies launched a new insurance system Monday to provide swift financial aid when nations are hit by devastating effects of climate change.

The so-called Global Shield is backed by the V20 group of 58 climate-vulnerable nations and will initially receive more than 200 million euros (dollars) in funding, mostly from Germany. Initial recipients include Bangladesh, Costa Rica, Fiji, Ghana, Pakistan, the Philippines and Senegal.

But civil society groups were skeptical, warning that the program should not be used as a way to distract from the much broader effort to get big polluters to pay for the loss and damage they’ve already caused with their greenhouse gases.

India made an unexpected proposal over the weekend for this year’s climate talks to end with a call for a phase down of all fossil fuels.

The idea is likely to get strong pushback from oil and gas-exporting nations, including the United States, which promotes natural gas as a clean ‘bridge fuel’ to renewables.

Two diplomats who spoke to The Associated Press on condition of anonymity because the proposal was yet to be officially debated said India could be trying to get payback for last year’s meeting, when it was publicly shamed for resisting a call to “phase out” coal. Countries compromised by calling for a vaguer “phase down” instead, which was nevertheless seen as significant because it was the first time a fossil fuel industry was put on notice.

The talks are due to wrap up Friday but could extend into the weekend if negotiators need more time to reach an agreement.

Egypt’s Foreign Minister Sameh Shoukry, chair of this year’s talks, said he expected all outstanding technical issues resolved by Wednesday so that climate ministers can hash out an agreement by Friday.

The U.N.’s top climate official appealed for constructive diplomacy to match the high-flying rhetoric heard during the opening days of the talks.

“Let me remind negotiators that people and planet are relying on this process to deliver,” U.N. Climate Secretary Simon Stiell said. “Let’s use our remaining time in Egypt to build the bridges needed to make progress.”

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AP Science writer Seth Borenstein contributed to this report.

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