Sharm el Sheikh (Egypt) (AFP) - The UN's COP27 climate summit approved on Sunday the creation of a special fund to cover the damages suffered by vulnerable nations battered by the impacts of global warming.

The two-week talks have whiplashed between fears the process could collapse, to hopes of a major breakthrough on a fund for climate "loss and damage".

Delegates applauded after the fund was adopted in the middle of the night following days of marathon negotiations over the proposal.

Collins Nzovu, Zambia's minister of green economy and environment, said he was "excited. Very, very excited."

"This is a very positive result from 1.3 billion Africans," he told AFP.

"Very exciting because for us, success in Egypt was going to be based on what we get from loss and damage."

The plenary, however, still has to approve a range of decisions and the final COP27 statement covering a host of other contentious issues, including a call for a "rapid" reduction in emissions in order to meet the aspirational goal of limiting global warming to 1.5 degrees Celsius from pre-industrial levels.

The session took a break as Switzerland requested more time to review the text.

An informal coalition of "high ambition" countries called for strong language on cutting emissions, moving away from planet-heating fossil fuels and to reaffirm the 1.5C goal.

The European Union even threatened Saturday to walk out rather than having a "bad" decision.

An adviser to Papua New Guinea, Kevin Conrad, said late Saturday that the "usual suspects" were attempting to remove all reference to fossil fuels. In the past, Saudi Arabia in particular has sought to block such language.

The latest draft calls for "accelerating efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies".

'Historic' deal

Conversely the deal on loss and damage -- which barely made it onto the negotiation agenda -- gathered critical momentum during the talks.

Developing nations relentlessly pushed for the fund during the summit, finally succeeding in getting the backing of wealthy polluters long fearful of open-ended liability.

With around 1.2C of warming so far, the world has seen a cascade of climate-driven extremes in recent months, shining a spotlight on the plight of developing countries faced with escalating disasters, as well as an energy and food price crisis and ballooning debt.

The World Bank estimated that devastating floods in Pakistan this year caused $30 billion in damage and economic loss.

Pakistan's Climate Minister Sherry Rehman said prior to the fund's approval that its creation would be "a historic reminder to vulnerable people all over the world that they have a voice and that if they unite... we can actually start breaking down barriers that we thought were impossible".

The fund will be geared towards developing nations "that are particularly vulnerable to the adverse effects of climate change" -- language that had been requested by the EU.

The EU demanded the wording with the aim of ensuring that wealthier developing countries such as China, which has grown into the world's second biggest economy, are not beneficiaries of the fund.

The Europeans had also wanted a broad funder base to cough up cash -- code for China and other better-off emerging countries.

The final decision text left many of the thornier questions to be dealt with by a transitional committee, which will report to next year's climate meeting in Dubai to get the funding operational.

'Keep 1.5C alive'

Now attention turns on whether the summit will agree on the final statement.

Scientists say limiting warming to 1.5C is a far safer guardrail against catastrophic climate impacts, with the world currently far off track and heading for around 2.5C under current commitments and plans.

Earlier, Colombian Environment Minister Susana Muhamad said to be "viable" the climate talks would need both a loss and damage fund and a commitment to 1.5C.

European Commission Vice President Frans Timmermans warned that if not enough was done to slash emissions and keep 1.5C alive, "there is no amount of money on this planet that will be able to address the misery that will occur through natural disasters, etc. that we're already seeing".