China voiced its deep concern and opposition today to a European Union plan to counter airline emissions and called for talks to resolve the issue.
The move comes a day after China's major airlines refused to pay any carbon costs under the new law.
From January 1st, all airlines using EU airports fall under the EU's Emissions Trading Scheme (ETS), and could be forced to pay fines of €100 for each tonne of carbon dioxide emitted for which airlines have not surrendered carbon allowances.
"China opposes the European Union's unilateral legislation. China has expressed to the EU our deep concern and opposition many times on a bilateral level," Foreign Ministry spokesman Hong Lei said.
"We hope the EU can take careful precautions with a cautious and practical attitude, and regarding those aspects involving China, appropriately discuss and handle this matter."
The scheme was launched in 2005 as one of the pillars of Europe's efforts to combat climate change, and if airlines persistently flout the law the EU has the option of banning the operator.
Following a December ruling from Europe's highest court that inclusion of airlines in the ETS was valid, China's official Xinhua news agency warned of a trade war.
Spokesman Hong said that other countries had taken an equally negative view of the legislation.
The United States has warned of possible retaliation, while a draft law in the US Congress proposes to make it illegal to comply with the EU legislation.
Cai Haibo, deputy secretary-general of the China Air Transport Association (CATA), told Reuters yesterday that China would not cooperate with the EU on the scheme.
"If governments like the US, China and Russia, can launch strong and forceful retaliatory measures, this will form enormous pressure we hope could make the EU to turn its head," he said.
CATA represents the country's four major airlines: flag-carrier Air China Ltd, China Southern Airlines, China Eastern Airlines and Hainan Airlines.
The association estimates the scheme will cost Chinese airlines 800 million yuan (€99 million) in the first year and more than triple that by 2020.
Mr Cai said Chinese airlines would consider legal action against the EU in response to any charges for carbon emissions.
The European Commission has assessed the impact on air fares at €2 to €12 per passenger. For airlines, the cost is gradual as 85 per cent of carbon allowances are handed out for free this year and bills would be due only next year after emissions are calculated.
Kelvin Lau, a Hong Kong-based airlines analyst at Daiwa Securities, said if Chinese airlines refused to pay the ETS charges it would have little immediate impact, but that ultimately the EU would not allow China to just walk away.
"It is still in a negotiation phase and maybe it's just a political gesture for Chinese airlines to say they won't pay - showing that China strongly opposes the rule," Mr Lau said.
"But it may not work as this is a law with legislative power and the EU would not easily let go."