At the two-week summit, which involves 193 nations, delegates are looking for ways to curb carbon emissions blamed for global warming once limits agreed in the 1997 Kyoto treaty expire in 2012.
After failing to reach a legally-binding agreement last year, the UN scaled back ambitions for this meeting, focusing on agreeing regulations to protect forests, verify emissions cuts and channel up to $100 billion a year in climate aid to developing nations.
In the last two days, China and India have softened some hard lines that prevented last year's Copenhagen summit to reach a constructive outcome.
China's offer to make its existing, domestic pledge to slow growth in carbon emissions binding under a UN resolution is a compromise it hopes will encourage developed countries to continue the existing Kyoto Protocol.
"We can create a resolution and that resolution can be binding on China," said Huang Huikang, the Chinese Foreign Ministry's envoy for climate change talks, quoted by Reuters.
But the China's target would still be voluntary, stressed China's chief negotiator Xie Zhenhua, a distinction from developed-nation targets under Kyoto. China wants its voluntary target to be pegged to the UN Climate Framework Convention on Climate Change, signed in Rio, which entered into force on 21 March 1994.
"Under the [UN Climate] Convention, we can even have a legally-binding decision. We can discuss the specific form. We can make our efforts a part of international efforts," said Huang Huikang.
"We're willing to compromise, we're willing to play a positive and constructive role, but on this issue [Kyoto], there's no room for compromise."
Developing nations want to continue with the Kyoto Protocol, which binds the emissions of nearly 40 developed countries, while industrialised backers want a separate agreement regulating all nations.
Japan, supported by Russia and Canada, is rejecting demands for developed countries to agree new emission cuts under the protocol.
They argue that nations inside it account for less than one quarter of global greenhouse gas emissions, so logically the protocol cannot play a bit part in curbing them.
Together with China, India has also hinted at a gentler line on the issue of monitoring, reporting and verification (MRV), the system under which countries should be assessed to prove they are complying with the agreed emission levels.
That developing countries should be subject to MRV has been a key demand of the US since last year's summit in Copenhagen.
Environmentalists pointed out that the carbon cuts stemming from the new documents, essentially the same pledges that countries put forward at Copenhagen, were not enough to keep global temperature rises since pre-industrial times below two degrees Celsius.
"The draft text provides a good basis for negotiation," said Gordon Shepherd, head of the global climate initiative at WWF, quoted by the BBC online. "We now look to governments to accept the text, so we can move out of process and into the substance of the negotiations."
UK Climate Secretary Chris Huhne said that he - and by extension, the EU - was as determined as ever to push towards a new global legally-binding deal. "The indications are good," he reportedly said, according to the BBC.
"We believe a legally-binding global deal is not just good for the planet; it also good for its inhabitants," he said.
Texts still too long
Still, the final stretch is filled with obstacles, including the complexity of the final document.
"The texts are still much too long," reportedly said Connie Hedegaard, the EU commissioner in charge of climate policy, referring to UN documents outlining possible goals at the UN climate talks in Cancún. "There are much too many options. They are still too complicated."
Not only targets
Besides deciding whether to extend the Kyoto Protocol or not, other issues include long-term climate aid for developing countries and payments to tropical nations to protect their forests.
The European Union wants to delay a deal to use carbon markets to reward countries which protect their tropical forests to beyond the Cancún talks, said Commissioner Hedegaard.
The aim of a UN agreement on tropical forests is to pay countries to preserve their trees, thus reducing carbon emissions, and is referred to as "reduced emissions from deforestation and degradation" (REDD).
The EU thinks it is too early to pay countries by giving them tradable carbon offsets, which they could then sell to rich countries to help them meet their carbon emission caps.
"The risk is that if you do it in the wrong way, you risk undermining the whole carbon market," Hedegaard told reporters at the 29 November-10 December talks in the Mexican beach resort.
"We hope that we can have an overall political understanding on REDD [...] here from Cancún."
"We think that we should be careful. It might have some impacts on the whole carbon market. We need to be very sure what we're doing. It's one of the things that needs somewhat more details."
(EurActiv with Reuters.)