CANCUN, Mexico (Reuters) - The outcome of U.N. climate talks is "on a knife edge" on the penultimate day of 190-nation talks with an impasse over the future of the U.N.'s Kyoto Protocol, Britain said on Thursday.
A deadlock on whether or not to preserve Kyoto after 2012 has hobbled the two-week meeting in Mexico, and countries will have to agree to defer the issue if they are to unlock other deals on climate aid and protection of rainforests.
"It's on a knife edge, we could well have a good outcome but we could also have car crash," said Chris Huhne, Britain's energy and climate change secretary, who is co-leading talks on Kyoto at the meeting in the Caribbean resort of Cancun.
The Kyoto deadlock was still blocking a deal to slow global warming, said India's environment minister.
"The outcome is still very uncertain," Jairam Ramesh told Reuters after overnight talks among about 190 nations.
Negotiators are trying to set up a new fund to help developing countries combat and adapt to climate change, work out ways to pay tropical countries not to chop down their trees, and agree a new mechanism to share clean technologies.
But first they have to get round a dispute about the future of Kyoto, which binds almost 40 developed nations to cut greenhouse gas emissions in a first period until 2012.
Japan has said that it will not sign up to an extension of Kyoto and wants instead an entirely new U.N. deal that binds Kyoto countries and emerging economies such as China and India to limit their emissions.
The developing nations say Kyoto members, most responsible for emitting greenhouse gases since the Industrial Revolution, must show the way and unilaterally agree to extend Kyoto into a second period.
"The Japanese are clearly signalling that they don't want to be the people who brought the conference to failure, I hope that we are going to make progress there, but it's not a done deal," said Huhne.
"We're not going to get a complete resolution of the issues around the legal form of what ultimately emerges, the second commitment period of the Kyoto Protocol," he said, adding that Venezuela and Cuba want faster progress on the second commitment period.
"The real question is whether people recognise we won't get that here and that we have to have a balance that preserves people's positions to fight another day ... and enable progress on all the other areas."
Editing by Kieran Murray