China, along with India, has been among the fiercest opponents of EU legislation that requires all airlines to offset carbon emissions under the bloc's Emissions Trading Scheme ETS.L, prompting warnings of a trade war.

Earlier this week, China said it would use revenue from a passenger tax on international flights to cut carbon emissions in the aviation sector.

"We asked our delegation in Beijing to look into what this might mean," Climate Commissioner Connie Hedegaard told reporters.

Asked whether this was something that could be seen as an equivalent measure to the EU's efforts to reduce carbon output, she said, "We don't have enough information yet."

The EU's highest court in a ruling in December said the EU legislation was consistent with international law, but critics have complained it breaches national sovereignty and have threatened retaliatory action.

The Commission, the EU's executive arm, has said it was driven to making all airlines pay for their emissions after more than a decade of talks at the United Nations' International Civil Aviation Organization failed to reach a global solution to rising emissions of greenhouse gases from aviation.

Since tensions have flared, efforts have gained momentum, and the Commission has said it could modify its scheme if the ICAO could come up with a viable worldwide plan.

In addition, "equivalent measures" by other countries could entitle them to exemptions from the EU scheme. These have not been clearly defined, but EU sources have said they would have to lead to cuts in aviation emissions.

China's Ministry of Finance told state-owned news agency Xinhua a tax on passengers on international flights operated by China-registered airlines would be used on new initiatives, including cutting emissions, Point Carbon reported this week.

The funds would be redirected to the newly established Civil Aviation Development Foundation, which will focus on emissions cuts, security enhancement and research and development.

ETS

The EU's ETS was designed to be a pillar of EU efforts to shift towards a greener economy, but it has collapsed to record lows, far below the levels needed to spur low carbon investment.

Hedegaard was speaking on the sidelines of informal meetings of energy and environment ministers in Horsens, Denmark, which are expected to discuss the state of the EU's ETS.

Energy Commissioner Guenther Oettinger said on Monday, he expected the Commission would draw up an action plan this year to support the market.

Hedegaard, whose department would take responsibility for any reform, said she could not comment until after Thursday's informal lunch debate on the issue, while Martin Lidegaard, Danish energy minister, said he did not expect any decision.

"We are trying to map where we are and what the positions are for each of the member states. Do they think we should have the ETS, do they think it is working now, and if not, what could be done?" he said to reporters. "But today we are not making conclusions, we are mapping."

For the Danish EU presidency, the Energy Efficiency Directive is a higher priority than the ETS, and it hopes to get a deal on the energy saving law before its spell of leading the EU debate expires in June.

The draft law seeks to close a gap between the EU's current rate of energy saving - around 10 percent - and a goal to cut use by 20 percent by 2020, compared with projected levels.

It has stirred up the ETS debate because greater energy savings could add to the huge surplus of carbon permits that has depressed the market.

Denmark, which has a very strong domestic commitment to the environment and energy efficiency, has been anxious to separate the ETS issue from already complex arguments on energy saving.

The European Parliament has pushed for a high level of ambition, whereas objections from member states have reduced the draft law to a pale shadow of the Commission's original proposal.

"Looking from the presidency's point of view, we have gone too low," Lidegaard said. "It would be very difficult to reach a decision with the parliament, if ministers will not show leadership."

(Additional reporting by John Acher; editing by Rex Merrifield and Jane Baird)

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