Climate talks appeared stalled late night Thursday on major issues going into the final day, but possibilities for a deal were buoyed by an unexpected proposal by the European Union on two of the thorniest issues, tying compensation for climate disasters to tougher emissions cuts.

Minutes after the United Nations summit's chairman warned delegates that “we are not where we need to be in order to close this conference with tangible and robust outcomes," the EU's top climate official made a surprise offer. To applause, he proposed a two-pronged approach that would create a pot of money for poor countries and push for steeper cuts of heat-trapping emissions by all countries, as well as the phasing down of all fossil fuels, including natural gas and oil.

The issues of compensation and pollution-cutting “are two sides of the same coin as far as the European Union is concerned," said European Union Executive Vice President Frans Timmermans, making clear that the 27-nation bloc won't offer more money unless there are concessions on emissions targets.

“If we do not perform enough on mitigation, there is no money on Earth enough to address the consequences of the climate crisis," Timmermans told The Associated Press. “The amounts of losses and damages will be such that we could never repair them.”

“So we absolutely need high ambition on mitigation if we want to have a fighting chance also to help the most vulnerable and face these challenges,” he added.

Vulnerable nations called for a deal to be sealed before the end of the talks.

"This is a historic opportunity that can’t be lost and that must be seized now," Maldives Environment Minister Aminath Shauna said.

Poorer countries that bear the brunt of climate change, from rising sea levels to extreme flooding, stepped up the urgency, accusing richer polluters of stalling and said they cannot wait another year for the creation of a fund to pay for damages.

Before Timmermans sprung the two-page proposal, special teams of ministers said they made progress on major issues, including loss and damage.

But the mood was somewhat grim.

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United Nations climate chief Simon Stiell urged negotiators to get cracking.

“There is an outcome where we all come out of this having done our jobs and with something that protects our planet,” Stiell said. “Let’s do that."

Then Timmermans came out with his proposals and negotiators, including U.S. Special Envoy John Kerry, dashed about trying to figure out what to do next.

Problems quickly popped up.

China, which had been quiet during much of the talks, insisted that the 2015 Paris Agreement should not be changed and money for the new fund should come from developed countries, not them. Saudi Arabia also said it was important “to not go beyond what we have” in the Paris pact and was reluctant to pony up to a compensation fund.

Asked to comment on the EU proposal, Kerry said he hadn't had a chance to read it yet.

“We’ll take a look at it,” he told The AP. "You know, we’ll see.”

Egypt's leadership of the summit, called COP27, came under criticism earlier Thursday presenting what some negotiators described as a 20-page “laundry list” of wide-reaching ideas.

“It is evidently clear that at this late stage of the COP27 process, there are still a number of issues where progress remains lacking,” Egyptian Foreign Minister Sameh Shoukry, the president of the summit, said late Thursday.

U.N. Secretary General Antonio Guterres, who had flown in for the final stage of negotiations, warned of a “breakdown in trust between North and South, and between developed and emerging economies.”

“The world is watching and has a simple message: stand and deliver,” he told leaders, adding that there was “no time for finger pointing.”

Negotiators were surprised by several ideas in the Egyptian draft that they said were never discussed at the two-week talks.

Among them was a call for developed countries to achieve “net-negative carbon emissions by 2030” — a far tougher target than any major nation has so far committed to and which would be very hard to achieve. The EU and U.S., for example, have said they aim to reach net zero emissions by 2050, China by 2060.

The head of the European Parliament Bas Eirkhout said it was "too broad, too many topics, too vague language and too many items, which I don’t think have to be in a cover decision.”

The conference is supposed to end Friday, but past gatherings have been extended to reach a deal.

Longtime negotiations analyst Alden Meyer of E3G said that unlike in previous years, the president of the conference delayed putting together special teams of ministers to push through solutions on big issues, except loss and damage, and that’s putting everything behind.

Read more: Adapting to climate change is the main focus of COP27: Info Minister

There were at least half a dozen instances where nations were “taking negotiations hostage” by taking hardline, seemingly inflexible stances, Meyer said. The biggest was on the compensation fund for climate disasters, known as “loss and damage” in negotiators’ parlance.

The United States has resisted any fund that would suggest liability and compensation — let alone reparations — for decades of greenhouse gas emissions by industrialized nations.

European countries have backed calls by island nations for a “mosaic” of financial arrangements drawing on public and private sources of money.

But there are big differences over who should pay.

German officials said the money should not come only from the industrialized nations, but also major emerging economies whose greenhouse gas emissions have increased sharply in recent decades.

Heavy polluters China and India, however, argue they should not have to contribute because they are still officially considered developing nations.

The issue of loss and damage is one of three financial aid pots discussed. Rich nations agreed in past conferences to spend $100 billion a year to help poorer countries develop cleaner energy systems and adapt to prevent future disasters — though they have lagged in giving the funds.

One longtime participant in the climate talks, Yamide Dagnet of the Open Society Foundation, said developed countries were showing more openness on “loss and damage.”

“But fear of compensation and liability remains a Damocles sword that needs to be overcome,” said Dagnet, a former EU negotiator at the talks.

“The United States is probably the most nervous about how much it can give in on loss and damage after decades of delaying tactics, backed by other developed countries,” she said.

Timmermans, the EU climate chief, expressed cautious hope that an agreement might be achieved yet in Egypt.

“I am by nature an optimistic person, but I’m also realist," he told The AP. "I think it is possible, but I grant you, it’s not going to be easy.”

His comments were echoed by Chilean Environment Minister Maisa Rojas.

“I think we’re making progress. We heard a lot of goodwill in particular on the financing for loss and damage,” she told The AP.

The EU offer on climate financing “looks promising. So, I think there will be good advances.”