China holds the world to ransom

Beijing accused of standing in the way of climate change treaty at Copenhagen as US throws down the gauntlet by backing $100bn fund to help poorest countries

China was under intense diplomatic pressure last night to abandon key demands which risk scuppering an international treaty on climate change in Copenhagen.

Today President Barack Obama is due to arrive in the Danish capital after Hillary Clinton electrified the faltering conference by announcing that America would back the setting-up of a climate fund for poor countries which would have $100bn to give away annually by 2020.

But at the same time she issued a blunt challenge to China, which has now overtaken the US as the world's biggest emitter of the greenhouse gases that cause climate change, to allow its promised emissions cuts to be internationally verified – something the Chinese have been stubbornly resisting.

For the Chinese not to accept "transparency" – independent verification – was a "deal breaker" for the US, Mrs Clinton openly said, which would see the $100bn offer disappear.

All eyes are now on China to see if it will allow itself to be cast in the role of the villain who prevented a new international climate deal and deprived the world's poorest people of the chance to get substantial new aid to tackle the effects of global warming which are now inevitable.

The initial reaction of the Chinese at Copenhagen last night was defensive and appeared to show no real movement. He Yafei, Vice-Minister for Foreign Affairs, said that his country would increase reporting on emissions under domestic law, but would not accept verification that was "intrusive" or infringed on Chinese sovereignty.

However, that may change today when the US President, Barack Obama, arrives – on a remarkable day trip to Copenhagen – to complete the unique assembly of nearly 120 world leaders who have travelled to the Danish capital to try to "seal the deal" of a new climate agreement.

With Gordon Brown prominent among them, the heads of state and government from around the globe spent yesterday in an intense round of one-to-one meetings – among many others, Mr Brown saw the Chinese Premier, Wen Jiabao – and last night they came together for the biggest VIP dinner in history, hosted by Denmark's Queen Magarethe in Copenhagen's Christiansborg Palace.

Before the dinner, an upbeat Mr Brown said he thought conditions for a global climate deal were now in place, and that the US offer went more than halfway to securing agreement – although talks were expected to continue through the night and well into today, when President Obama jets in at 8am, before jetting out again at 4pm.

But although the President's appearance may be what finally secures a deal, there is no doubt that it was the intervention of his Secretary of State that loosened what seemed to be a hopeless logjam in the talks.

It was unforgettable political theatre. Like a poker player with a sudden new bet, the power-dressed Mrs Clinton changed the game instantly as she pulled her gigantic sum out of the US back pocket and slammed it down on the negotiating table.

She was not saying that America would provide $100bn on its own account. She was not even saying how the money would be raised.

But in giving open and unambiguous US backing to the figure, which was first suggested by Gordon Brown last June, she turned the idea of a colossal new Climate Fund into reality – something which will have an enormous attraction to many of the poorer African countries, whose distrust of the rich nations has been one of the factors which has bedevilled negotiations over the past fortnight.

Mrs Clinton said: "In the context of a strong accord, in which all major economies stand behind meaningful [emission cuts] and provide full transparency as to their implementation, the United States is prepared to work with other countries towards a goal of jointly mobilising $100bn a year by 2020, to address the climate change needs of developing countries."

The time was at hand, she said, "for all countries to reach for common ground and take a historic step which we can all be proud of."

In words which could not show a greater contrast with the attitude of the previous administration, she went on: "I am deeply concerned about the consequences [of global warming] for developing countries, from Bangladesh to the Maldives, from the Caribbean to West Africa, and the Pacific Islands. If we cannot secure the kind of strong accord I have described today, we know what the consequences will be. We must try to overcome the obstacles that remain. We must now seize this moment to raise our oars and row in the same direction towards our common destination and destiny."

But despite the optimism engendered by her démarche, Britain's lead negotiator, the Energy and Climate Change Secretary, Ed Miliband, warned that the talks may still founder: "It's a race against the clock," he said.

The state of play: Where the US stands

What the United States is giving:

* Emissions The US promised to cut 2005 emissions by 17 per cent by 2020. This amounts to about 3 per cent below 1990 levels, the benchmark used in the Kyoto Protocol. The US also said it would extend cuts to 30 per cent below 2005 levels by 2025, and 83 per cent by 2050.

* Finance Secretary of State Hillary Clinton said the US will work with other countries towards a goal of jointly mobilising $100bn a year by 2020 to address the climate change needs of developing countries.

* The US pledged $1bn as part of a $3.5bn scheme as initial financing towards slowing deforestation.

What the United States wants:

* Mrs Clinton made clear China must be transparent over CO2 emissions.

* President Obama wants an accord in Copenhagen that covers all issues with "immediate operational effect".