The United Nations General Assembly this week gave hints of a coming clash between developing nations and the industrialized world over how to compensate vulnerable nations that are being hit hardest by climate change.

Why it matters: With climate disasters taking a mounting toll in vulnerable countries, much of the focus at November's COP27 climate summit in Egypt may be on the responsibility of industrialized nations to provide funding to those countries for climate damage they did not cause.

Driving the news: The topic of what is known under the UN climate treaty as "loss and damage" is fraught, particularly with the U.S., since funds going toward compensation are seen by critics as an admission of liability.

• Securing the votes in Congress for climate adaptation funding, let alone loss and damage issues, is controversial. This hamstrings U.S. negotiators at climate summits.

Zoom in: UN Secretary-General António Guterres made clear in his speech to world leaders that a successful COP27 outcome must include funding for loss and damage.

• He proposed that some of this money come from oil-and-gas companies' "windfall profits" during this time of soaring energy and food costs.
• In a video released just before the New York summit, Egyptian foreign minister Sameh Shoukry, host of COP27, outlined a list of priorities that includes loss and damage.
• Such an outcome, Shoukry said, would provide developing countries with "means and resources to avert, minimize and address" such climate consequences.

Between the lines: The Alliance of Small Island States, a coalition of some of the most vulnerable nations to global warming, plans to push at COP27 for the creation of a new multilateral fund for loss and damage under the 1992 UN climate treaty.

• Michai Robertson, the alliance's lead negotiator for climate finance, told Axios in an interview that loss and damage are "connected to this concept of climate justice and common responsibility."
• He said paying into such a fund is a matter of solidarity. The whole world is experiencing global warming, though some countries are more responsible for causing it than others, he added.
• Robertson said he, along with other members of the AOSIS negotiating team, was discouraged by John Kerry, the top U.S. climate diplomat, who at a Tuesday event bristled at a loss and damage fund.

What they're saying: "You can't just set up a [funding] facility in six weeks. Let's be serious about this," Kerry said in response to a loss and damage question.

• "Where's the money coming from? Do you think this Republican Congress, where we couldn't get one vote for this legislation, is going to step up and do loss and damage? Good luck."