COP27: Deep fault lines remain as talks enter crunch time

Major fault lines remain as negotiations at COP27 in Sharm el-Sheikh, Egypt, hit the middle of their second week.

State of play: This is the negotiating period before the all-night sessions begin, when draft texts are circulating in hallways and in the press, but ministers are waiting for the official proposal that may become the COP27 agreement.

• A two-page text of "possible elements" for a COP27 decision circulated throughout the day yesterday.
• The G20 communique, issued this morning in Bali, Indonesia, is likely to inject much-needed momentum into the climate summit, but it is clear that some COP agenda items are mired in disagreements.

The big picture: Diplomats are wrestling with particularly divisive issues, chief among them being climate damages (also known as loss and damage).

• This morning, the chair of the Alliance of Small Island States, which are feeling the effects of sea level rise, criticized some developed nations for “furiously trying to stall progress” on climate damage financing.

What they're saying: "To get an ambitious outcome here in Sharm that builds on this G20 text will require a strong coalition of developed and developing countries to push for it," Alex Scott, who leads climate diplomacy for E3G, told Axios from Egypt. "And for that, we'll need to see more compromise on loss and damage."

The intrigue: There is a far-reaching proposal from India that is gaining traction and would break precedent if it were to be included in the final text. However, it was not in the G20 communique.

• Instead of singling out coal use for a phase down, as the Glasgow Climate Pact did, it calls for an overall "fossil fuels" phase down.
• So far, the EU, a coalition of least-developed countries, the U.K. and a few others support this language, which is likely to be opposed by Saudi Arabia and potentially other oil-producing states.

• Alden Meyer, a veteran of UN climate talks going back decades, who is now with E3G, said countries could put pressure on fossil fuel producers such as Saudi Arabia and Russia by pushing the COP president to insert India's proposal into the proposed text.
• "They're right from a science perspective, we have to phase down all three [fossil fuels]," he said at a press conference Wednesday morning.
• "Let's build support for that among developed and developing countries to include oil and gas, get the [COP] president to put it in the decision, and then dare the Saudis and Russia to come out and explain why they think coal should be phased down and not oil and gas in view of the whole world at the closing plenary," Meyer said.

What we're watching: If and when the cover text emerges today and what it contains, and how countries react to it.