The leaders of eight top industrialised nations, the US, Canada, Japan, the UK, France, Italy, Russia and Germany, were still wide apart on summit host Chancellor Angela Merkel's proposal that they agree to reduce greenhouse gas emissions by at least 50 per cent of the 1990 levels by 2050 and commit to global temperature rise of no more than 2 degree Celsius.
In spite of hard bargaining that followed a gala opening dinner and lasted late into the night, the G-8 negotiating teams could not agree on a common position and left the issue for the G-8 leaders to decide on Thursday and Friday.
Merkel, who had made combating climate change the most important item on the agenda of the summit, will now try to win over her colleagues for her proposal during the working session in the afternoon when climate change and energy efficiency will be the main topic of their discussions.
The G-8 nations' relations with the threshold countries and the situation of the world economy are at the centre of their first working session.
At a working luncheon, the G-8 leaders will discuss foreign policy issues including the Middle East, Iran, Dafur, Kosovo and Afghanistan and in their second working session, they will take up issues related to climate change.
The United States continued to reject setting a limit or timetable for reducing greenhouse gas emissions even after a bilateral meeting on Wednesday between President George Bush and Chancellor Merkel.
Talking to reporters after the meet, Bush made no mention of Merkel's demands, but expressed strong desire to work with the G-8 nations on a new agreement to reduce greenhouse gas emissions and reduce dependence on foreign oil supplies.
Climate change will again be the reason for discussions when G-8 leaders are joined on Friday by Prime Minister Manmohan Singh and the leaders of China, Brazil, South Africa and Mexico.
The United States wants to reduce greenhouse gas emissions through the use of new technology and by involving countries like India and China.
Even though the US has not signed the Kyoto Protocol on reducing greenhouse gas emissions, Bush expressed his desire to work for a successor agreement when the current phase expires in 2012.
Merkel's plans for combating climate change were supported by new French President Nicolas Sarkozy and outgoing British Premier Tony Blair. A spokesman for Sarkozy said he held the view that a binding agreement on reducing greenhouse gas emissions was essential for the credibility of the G-8.
The dispute between the US and Russia over the US missile defence system in the Czech Republic and Poland will dominate the discussions at the summit even though Bush toned down his criticism of Russian democracy and opposition to missile shield plans after arriving in this Baltic Sea resort.
The Russians are not convinced by American argument that the planned shield is aimed at possible missile attacks by countries like Iran or North Korea and continued to reject the project strongly.
President Vladimir Putin is expected to reaffirm Russia's opposition to the American plan at his bilateral meeting with President Bush and at the G-8 meeting.
European leaders may raise their concern over Putin's recent threat that Russia will target missiles on Europe if the US went ahead with its missile shield plans. European politicians and media have criticised the statement as "cold war-style rhetoric."
Commenting on Putin's warning, Bush told journalists in Heiligendamm: "Russia is not an enemy. There needs to be no military response because we're not at war with Russia. Russia is not going to attack Europe."
The G-8 meeting is being held at a luxury hotel on the beachside in Heiligendamm, which is sealed off from anti-globalisation protestors by a 13-kilometre-long fence.
In spite of stringent security measures put in place by the authorities, several thousand demonstrators on Wednesday managed to outwit police and came about 20 metres close to the fence, but were driven back with batons and water cannons.
Anti-globalisation protestors also blocked several approach roads to the summit venue by staging sit-ins at various locations and had to be removed by police.
Their protest actions, which were largely peaceful, delayed the convoys of various G-8 delegations and many of around 5,000 journalists covering the summit.