* Airlines balk at fines despite scaled-down EU emission rules
* Aeroflot challenges German fine
* Chinese, Indian carriers told to boycott
By Ben Garside
LONDON, Aug 8 More than a year after the European Union was forced to rein in its scheme for charging airlines for emissions, some foreign carriers are still balking at paying.
The EU's unilateral push in 2012 to charge airlines for carbon emissions set off a diplomatic row with China, India and others and eventually Brussels backed down, confining its scheme to flights within the EU.
Most airlines - those responsible for 98 percent of the regulated emissions - paid up by a May 2013 deadline to submit a carbon permit for every tonne of carbon emitted on EU flights in 2012.
But some airlines, including Chinese and Indian carriers operating a tiny number of internal EU flights, have been holding out.
Both have all along opposed the scheme, arguing their inclusion in the EU's Emissions Trading System breached sovereignty rules.
"We oppose unilateral measures in this regard," a spokeswoman from China's representation to the EU told Reuters by email, adding Beijing wanted a global approach to regulating emissions led by the United Nations.
Germany, one of the main governments chasing up unpaid fines, in April issued 2.7 million euros ($3.62 million) in penalties to 61 carriers.
Russia's Aeroflot has also balked at paying a 215,600 euro fine to Germany.
"Following the examples of some other countries, Aeroflot has lodged an appeal to saying that these fines are not acceptable," Aeroflot said in an email to Reuters.
Required by EU law to enforce the penalties, like Germany, Britain, France and the Netherlands as the bloc's main air transport hubs also lead the search for payments.
The Netherlands and France each still have one large airline in breach, officials told Reuters. The Dutch have started an enforcement procedure while France plans a penalty decision by the end of summer. A spokeswoman for Britain declined to give details about its enforcement procedure.
As of Friday, EU records showed China's big three state-owned carriers - China Southern, China Eastern and Air China - regulated by the Netherlands, France and Germany respectively, had either not yet set up the registry accounts needed to comply or had failed to submit data for 2012.
Air India and Jet Airways, regulated by Britain, had also not opened the required accounts.
"There are a small number not complying for political reasons. Some, like India, challenge that Europe has a right to do anything to their carriers," said Bill Hemmings of campaign group Transport and Environment.
Yet he noted their refusal to pay raised wider questions about enforcement under the EU ETS, Europe's flagship policy to regulate emissions blamed for climate change.
"If you're a foreign airline and you can be let off, what about foreign entities owning power stations?" he said.
Since 2005, the EU ETS has regulated over 11,000 power plants and factories emitting almost half of Europe's greenhouse gas output with a very high rate of compliance.
The penalty for non-compliance is 100 euros per tonne of emissions, plus the cost of permits to make up for the shortfall.
(1 US dollar = 0.7458 euro) (Additional reporting by Susanna Twidale; editing by Jason Neely)