Beijing will launch trade sanctions and prohibit mainland carriers from joining the European Union's emissions trading scheme, which came into effect on Sunday. It says the EU's move to include global airlines in the scheme is illegal.
Under the scheme, all airlines flying to and from Europe face levies on their carbon emissions. The levies will be charged based on the entire length of a flight.
The Civil Aviation Administration of China (CAAC), the regulatory agency, is considering measures to fight the emissions scheme, including banning mainland carriers from participating in it, an official said.
'Various government departments are formulating retaliatory measures at the request of the China Air Transport Association and mainland airlines,' said Cai Haibo, a deputy secretary-general of the association, which represents Air China, China Eastern Airlines, China Southern Airlines and Hainan Airlines.
The US House of Representatives has passed a bill prohibiting US carriers from participating in the scheme. It awaits approval by the Senate.
Niels Ladefoged, who is responsible for the scheme under the office of the commissioner for climate action, said there was a 'clear requirement for airlines' to comply and there were also 'clear penalties' for any failure to comply.
Ladefoged would not directly comment on the threat of retaliation by China or other countries, but said: 'We are not aware of any major issue of non-compliance.' He said that while airlines were fully entitled to take legal action, 'we are confident with the legality of the scheme'.