BEIJING China threatened on Tuesday to take unspecified measures to defend itself against a European Union airline emissions fee scheme, a day after China banned its airlines from joining the program without its permission.
The comments come less than a week before Chinese and EU leaders hold a summit in Beijing, with the EU looking to China to dip into its huge foreign exchange reserves to help the eurozone tackle a debt buildup that threatens its economic stability.
The tussle over the emissions scheme, which levies charges for carbon emissions from flights in and out of Europe, has also drawn ire from other countries, including the United States and India. Foreign governments argue the EU is exceeding its legal jurisdiction by calculating the carbon cost over the whole flight, not just Europe.
The European Commission says the scheme is needed to tackle growing aviation emissions as part of a global fight against climate change. But the dispute has become a trade row at serious risk of escalation.
"China will consider taking necessary steps in accordance with the way things develop to protect the rights of our nationals and our companies," Foreign Ministry spokesman Liu Weimin said.
"We hope that the EU ... can pay attention to China's concerns and take a practical and constructive attitude to increase communication and coordination with all sides to find an appropriate solution that all sides can accept," Liu told reporters at a regular news briefing.
"China has already used multilateral and bilateral forums to express its opposition," he said.
China's State Council, or cabinet, said on Monday that all domestic airlines were banned from taking part in the EU Emissions Trading Scheme ETS.L unless given government approval.
A group of 26 countries vehemently opposed to the EU's aviation emissions trading scheme will meet in Moscow on February 21 to discuss a plan of action, EU and Indian sources told Reuters on Monday.
China was an early opponent of the EU legislation, which took effect from January 1. No airline will face a bill until next year, after this year's carbon emissions have been calculated. Initially airlines will be handed allowances to cover some 85 percent of their emissions. Each allowance represents a tonne of carbon pollution.
Under the scheme, airlines that do not comply may face European fines of 100 euros for each tonne of carbon dioxide emitted for which they have not surrendered allowances. In the case of persistent offenders, the EU has the right to ban airlines from its airports.
The European Union's executive body has said talks were ongoing with various nations to try to settle disagreements and that it was confident the scheme, which is a mainstay of its efforts to tackle climate change, would survive.
The China Air Transport Association CATA.L, which last year urged China's airlines to refuse to take part, said the scheme would cost 800 million yuan in the first year and more than triple that by 2020.
On Monday, the EU's Ambassador to China, Markus Ederer, said at current jet fuel prices, the per-ticket cost increase from the scheme on a one-way Beijing-Brussels trip would amount to about 17 yuan.
(Reporting by Ben Blanchard, Writing by Michael Martina; Editing by Ken Wills and David Fogarty)