Mainland airlines plan to file a lawsuit to challenge the EU's emissions trading scheme that fines airlines for exceeding emission quotas on all European flights from next year. Flag carrier Air China and the China Air Transport Association (CATA) will file the lawsuit in a European court. The emissions trading scheme is expected to cost the airlines millions of yuan when implemented. 'We will bring the case to a European court no later than September,' said Cai Haibo, a deputy secretary general of CATA. CATA decided to sue even after the European Union offered to exempt flights from China to Europe, although outbound European flights would be subject to the measure. 'We don't want to negotiate on something that is wrong in principle,' Cai said. The United States Air Transport Association, along with three leading US airlines, filed a suit in 2009, saying the initiative - designed to reduce greenhouse gas emissions - was illegal and an infringement of international law. The impact on Chinese carriers would be greater than on the airlines of developed countries because air traffic between China and Europe was growing rapidly, Cai said. The EU used last year's traffic data to calculate the maximum amount of carbon dioxide that can be emitted by a carrier. Cai said that put China at a distinct disadvantage because mainland flights to and from Europe were increasing markedly. For any emission exceeding the cap, the carrier will have to buy an allowance, or carbon quota, in the market. Otherwise, it will be fined Euro100 (HK$1,092) for each tonne of carbon above the limit. Potential speculation in the price of carbon quotas also worries mainland carriers, since the prices could be manipulated by investment banks, financial institutions or even EU itself, Cai said. Airlines would face huge carbon financing costs if the carbon quota price surged. 'The news that Chinese airlines are considering a separate legal action against the EU is another expression of the unanimity of airlines around the world that the scheme is an exorbitant, counterproductive and illegal tax that must be overturned,' said Steve Lott, a vice-president of communications for Air Transport Association, which took the case to the European Court of Justice. The trade body estimates US airlines will have to pay more than US$3.1 billion into EU coffers between next year and 2020. ATA's case, which was heard on July 5, drew support from the International Air Transport Association, which represents more than 290 airlines globally. A ruling is expected later this year or early next year. The US Congress last month criticised the emissions trading scheme and ordered the transport department to prohibit US carriers from participating in it. On August 1, CATA asked 20 international airlines to sign a joint declaration to denounce the scheme. Among the signatories were China Eastern Airlines, China Southern Airlines, Cathay Pacific Airways, Algeria Airlines, American Airlines, All Nippon Airways, EVA Airways and Singapore Airlines. 'I hope the declaration serves as a wake-up call to the EU that it should think twice before acting against the whole world,' Cai said. The EU decided to include the aviation industry in the emissions trading scheme in November 2008 as part of a road map to reduce emissions to 20 per cent below 1990 levels by 2020 and raise the share of renewable fuel in its energy mix to 20 per cent. The scheme already covers power companies, oil refineries, steel works and other industries. Many carriers consider it a violation of the International Convention on Civil Aviation, or the Chicago Convention, regarding charges or taxes on aviation activities. They also object because the EU's scheme will cover emissions from the entire flight to and from the EU domain, which they say exceeds the EU's jurisdiction and imposes control and emission fees in non-EU regions.