The differences between the United States and Europe are narrowing in the final hours of the Kyoto climate summit, the chairman of the core negotiating team has said.

Yet observers say the two sides are holding out until the last minute in the hope of getting more from the expected deal.

Chairman Raul Estrada gave the main negotiating group a deadline of 6am local time on Wednesday (2100 GMT on Tuesday) to reach agreement.

He said: "It is my understanding that we are going to have a very positive end in our negotiations, the trend is a very positive one, but there are still some points to be settled."

The draft protocol proposes an overall cut of 5% in greenhouse gas emissions by developed countries by 2010.

Mr Estrada added: "The total commitment of 5% is limited in a differentiated way, with some countries in a possibility to increase their emissions, others to keep the level they have and the most reducing their emission."

After a late night meeting on Tuesday between officials from the United States and the European Union, an Italian delegate, Paolo Espinosa, said America was ready to accept a cut in its emissions of more than 5%.

Earlier the United States unveiled plans to allow a greenhouse gas trading system to cut emissions of global warming pollutants.

Under the plan an alliance of countries including America, Japan, Russia, Australia, New Zealand and Canada would be able to trade in gas emissions.

The American Under Secretary of State, Stuart Eizenstat, said the proposal would allow the six nations, and any country that wanted to join, to trade emissions amongst themselves to meet their own specific targets for cuts in the next century.

Mr Eizenstat said under the system of emissions trading, countries which did not meet their specified targets for reduction would be able to buy the right to produce more emissions from countries which have fallen short of their allocations.

Delegates hope to reach an agreement

Russia, whose economy collapsed following the break-up of the Soviet Union, has seen a big downturn in the amount of greenhouse gases it emits because factories and other facets of its vast manufacturing sector have closed.

Under the trading plan, which is opposed by a number of countries and many environmental groups, Russia would be able to sell the unused portion of its allowable emissions for badly needed foreign capital.

But critics argue the plan would allow big polluters like the United States, which is the world's largest emitter of the gases, to buy their way out of cutting their own output.

The move was largely seen as an American counter to the European Union's stance. The EU wants to impose legally-binding cuts of 15 % on developed countries' output of greenhouse gases, blamed for warming the world.

The American plan was attacked by John Gummer, a member of the British negotiating team.

The former Conservative Environment Secretary condemned America's scheme as unacceptable, because it would mean Britain and other EU countries making deeper cuts in greenhouse gases than bigger polluters such as America and Australia.

"This would mean that Germany and Britain, the Netherlands and Denmark would all have to do more in order the rich America and rich Australia should do less.

"I am perfectly prepared to argue we should help a poor country so that it could increase its emissions and improve its standard of living, but the idea that I should do more so that a rich country like Australia should have more, is unacceptable," he said.
 
The BBC's Tokyo correspondent, Juliet Hindell, explains Raul Estrada's plan (Dur 1:08)

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