The New York Times has a nice article explaining the persistent tension between the G-77 (and China) and the industrialized countries. It basically comes down to money.
In UN parlance, this is concern over technology transfer and adaptation. The highest rates of growth for carbon usage are in developing countries; but these countries see this growth as essential to developing vibrant economies. They are willing to use low carbon alternatives, but argue that the West should pay for it since the West had the luxury of deploying decades of high carbon growth.
“Adaptation” refers to the urgent money needed to help the most vulnerable countries adapt to the immediate challenges of a hotter planet. Part of what makes these countries (like small island developing states) so vulnerable is rapid change and inadequate resources. Given that these countries didn’t contribute to the climate problem, any global deal will need to have significant financing.
The current Kyoto structure for financing is woefully inadequate. There is a small tax placed on carbon credits, but it hasn’t raised nearly enough money. The article places the figure at $18 million. Nicholas Stern says that there should be about $85 billion per year going to adaptation.
The rich countries have not agreed on a financing framework. The EU is proposing somewhere between $33-$74 billion per year. Even if that figure was agreed to in theory, the mechanisms by which financing would be insured are uncertain. The West generally likes to push market and private sector solutions; but the the G-77 prefers direct transfer from governments, arguing that market mechanisms can be too unpredictable.
With all of the talk in the US about emissions reductions, it is important to recognize that the North-South financing issue may be an even bigger obstacle in the journey to secure a global deal.