If the U.S. and China can agree on a set of principles on the way forward on climate change and get backing from the other APEC members, that will be very hard to ignore, Malcolm Cook from policy think tank the Lowy Institute told Reuters.
Australia's Prime Minister John Howard, expected to call an election soon after the September 8-9 summit, has placed climate change on top of APEC's agenda. APEC, Howard hopes, will counter voter perceptions he has done little to combat global warming.
The United States and Australia have refused to ratify the Kyoto Protocol capping greenhouse gas emissions, calling instead for aspirational targets bracketing developed and developing economies, such as China and India.
With Russia's President Vladimir Putin also in Sydney, officials hope the APEC declaration will build on June's G8 summit, in which rich nations agreed to consider a 50 percent cut in emissions by 2050, and throw the momentum forward to a U.N. climate change meeting later this month.
Howard has ruled out binding targets but is hopeful of APEC setting a global goal ahead of another September big emitters meeting in Washington, called by Bush to work out future emissions cuts.
China has come under pressure about its carbon dioxide emissions. The country is expected to overtake the United States as the world's largest CO2 emitter by 2008.
Chinese leaders have rejected emissions caps, but along with the United States, Japan, India, South Korea and Australia is a member of the AP6 group of countries that backs clean energy as a major way to curb emissions. The group also hopes cleaner energy technology will underpin a post-Kyoto pact.
Kyoto's first phase runs out in 2012 and governments want environment ministers to launch two-year talks at a U.N. gathering in Bali, Indonesia, in December to work out a replacement for the Protocol by 2009.
But energy-hungry China views with suspicion planned security talks on the APEC sidelines in Sydney between Bush, Japanese Prime Minister Shinzo Abe and Australia's Howard.
Abe wants the so-called trilateral security talks to become a permanent fixture at APEC, while China has aired suspicions of encirclement if the talks are widened to include India, as Abe has suggested.
Chinese President Hu Jintao became the first major leader to arrive the APEC meetings, starting his six-day visit to Australia on Monday night in resource-rich Western Australia state.
Analysts say China's geopolitical strategy and military build-up is oriented toward securing energy resources to fuel Asia's second-biggest economy.
Your state is richly endowed with resources, Hu told a beaming Western Australia state premier Alan Carpenter.
Central Sydney is in lockdown for APEC, with thousands of police and troops patrolling inside a five kilometer (3 miles) concrete-and-steel wall sealing off the Sydney Opera House and other central venues against expected violent protests.
Inside the barrier, U.S. officials will try to push forward the stalled Doha round of world trade talks as negotiators reconvene from August holidays in Geneva for what many believe is the last chance to reach a deal.
APEC will focus on intra-regional obstacles to trade, including such behind the border issues as competition policy, red tape, corporate governance and legal certainty, senior officials said.
Hu will face questions from other APEC leaders about trade and investment policies after recent problems with Chinese-made goods.
The 21 leaders are to talk over ways to secure the safety of food supplies, the latest focus of the group's counter-terrorism initiatives following previous ones on shipping and airport security.
APEC members are Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, South Korea, Taiwan (under the name Chinese Taipei), Thailand, United States and Vietnam.
(Additional reporting by Caren Bohan in Washington and John Ruwitch in Hong Kong)
($1 = A$1.22)