Britain faces paying billions of pounds in compensation to less developed countries as part of a new international deal on climate change. The agreement, which was thrashed out in an extra day of talks at the United Nations summit in Qatar, will mean rich nations having to compensate poorer ones for losses suffered due to global warming.
Angry exchanges between delegations brought threats of walkouts and even tears from small island states, which pushed to have the new mechanism introduced despite fierce opposition from the United States. Although it is not due to come into force for at least a year, the agreement could cost wealthy nations such as Britain billions of pounds.
The decision was reached as economists warned that commitments to cut carbon emissions - agreed earlier in the talks as part of negotiations carried out by the European Union - could cost the British economy about 23 Billion pounds by 2020.
Other major economies such as the US, China and Japan refused to sign up to similar commitments, leaving businesses in Britain and other European countries at a competitive disadvantage. Britain has also pledged to provide pounds 2.9?billion in aid to help developing countries adopt green technology and cope with the consequences of climate change.
The new agreement on compensation is likely to incur additional costs to the UK, to help "vulnerable" countries pay for "loss and damage" caused by sea level rise, extreme weather and other problems resulting from global warming.
A coalition of 43 small islands and low-lying coastal countries, including the Maldives, Mauritius, Seychelles, Cuba, Bahamas and Fiji, pushed for the measure, saying that they faced an onslaught of drought, floods and famines, and needed help to cope.
They argued that under the principle of the polluter paying for harm to the environment, richer developed nations - responsible for the bulk of greenhouse gas emissions -should provide financial and technological help to those countries most at risk.
They said the fund could act as a kind of insurance system to help small islands that are likely to suffer most from climate change. Ed Davey, Britain's Climate Change and Energy Secretary, who is leading the UK delegation, said Britain had backed putting a reference to loss and damage into the agreement and was in favour of stronger targets on climate change.
There were cheers around the Qatar National Convention Centre in Doha on Saturday when the final text of the agreement setting out the plan to introduce the compensation was passed, despite objections from Russia and America.
Davey said: "I do think we have a duty to help people who are losing their countries below the waves." Recent problems in Britain showed how important it was to deal with floods, he said, adding, "The UK is already spending hundreds of millions on flood defences as we see more flooding - which many scientists say is attributable to climate change. There are poor countries that also need support in that."
"We will look at that issue and consider it with others. There is an important debate to be had and the text that has been put forward - while not absolutely specific - ensures we look at this seriously in the international community."
The exact details of the loss and damage scheme, including how much developed countries will have to pay, are expected to be decided at meetings of the UN Framework Convention on Climate Change, next year or in 2014.
Malia Talakai, the deputy lead negotiator for the Alliance of Small Island States, said: "At the present time, developing countries are left to cover the costs of loss and damage from climate impacts that are not of their making."
Earlier, Britain was among 38 industrialised nations to sign up to an extension of the Kyoto Protocol, the only binding pact on cutting greenhouse gas emissions. The deal extends the life of the commitment past this year, when it was due to end, until 2020. However major polluters including China, the US, Canada, Russia and Japan did not sign up to the pact.
Under the Kyoto Protocol, which came into force in 2005, Britain was committed to reduce emissions by about 34 per cent as part of the 20 per cent reduction target agreed by negotiators for the whole of the EU. The extended commitment contains a clause that could lead to the EU commitment expanding - to a 30 per cent reduction target - something that officials say could increase British liability to a 42 per cent cut. Economists estimate this could cost the UK economy about 23billion pounds by 2020.
UK prime minister David Cameron is likely to face heavy criticism from his back benches if Britain is left facing expensive targets that are not being matched by industrial competitors. More than 100 Conservative MPs — including several within the Cabinet — are said to be climate change sceptics.
Clacton MP Douglas Carswell, one of the leading Conservative sceptics, said: "The whole science of climate change is highly questionable. By pursuing new emissions targets we are only accelerating a process of deindustrialisation in Europe, which is transporting manufacturing jobs to other countries."
After 12 days of deadlocked talks, delegates finally agreed on a framework that will help form the basis of a new binding deal to be negotiated in 2015 in time to replace the Kyoto Protocol in 2020.
Environmental groups, however, have expressed frustration at the protracted process and lack of progress in successive talks, which are now in their 18th year.
One of the main aims throughout has been limiting global temperature rises, which have been attributed to growing levels of greenhouse gases — primarily carbon dioxide — in the atmosphere. A key objective has been to limit global average temperature rises to 2C. There are more than 17,000 delegates attending the talks in the desert in Doha. It is estimated that the talks themselves have had a carbon footprint of more than 40,000 tons of carbon dioxide - equivalent to cutting down 64 hectares (158 acres) of rainforest.
The Swarovski chandeliers in the main meeting hall and a city of skyscrapers, with delegates ferried around in limousines, have made a surreal setting for the talks. Qatar, one of the world's richest nations, with plentiful supplies of cheap energy from its oil, has the largest carbon footprint per person in the world.
There was disappointment that the hosts had failed to build any momentum for cutting emissions in the Middle East. Negotiations ran through Friday night and into Saturday, and finally ended without any firm commitments on reducing carbon emissions nor on climate change aid, another key topic under discussion at the summit.
Richard Gledhill, a PricewaterhouseCoopers climate change adviser, said that the agreement to address the loss and damage suffered by developing nations marked a significant victory for the countries most at risk from the impacts of global warming.
Gledhill said: "The issue of loss and damage is closely tied in with the issue of legal liability. Some lawyers expect climate change to unleash a flood of liability claims."
Nick Mabey, the director of sustainable development campaign group E3G, said negotiations were badly managed in Doha. But with a global deal again on the table, the world was finally moving on after the failure of governments to reach a binding agreement to succeed the Kyoto Protocol at the UN talks in Copenhagen in 2009, he said.
"We have cleared up the legacy of Copenhagen now we can focus on a comprehensive agreement in 2015 that decides whether we will face a 2C or a 5C rise in temperature in future."
(Additional reporting: Rob Watts)