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An aide to United Nations Secretary General Ban Ki Moon holds the instruments of an agreement from China's President Xi Jinping and U.S. President Barack Obama to join the Paris agreement during a climate change event ahead of the G20 Summit, at Westlake Statehouse in Hangzhou, China September 3, 2016. REUTERS/Jonathan Ernst

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HANGZHOU, China (Reuters) - China, the United States and Europe all pledged support on Saturday for a new deal to curb carbon dioxide emissions by airlines which is due to be finalised at a meeting of the UN's International Civil Aviation Organisation (ICAO) in September and is expected to go into effect from 2021.

Aviation was excluded from last December's climate accord in Paris when countries agreed to limit the global average rise in temperatures to "well below" 2 degrees Celsius (3.6 degrees

Fahrenheit) above pre-industrial levels.

The proposed new deal on aviation, which aims to cap the carbon pollution of all international flights at 2020

levels will be voluntary between 2021 and 2026 and then mandatory from 2027 for the world's largest emitters.

Airlines in participating countries would need to limit their emissions or offset them by buying carbon credits from designated environmental projects around the world.

ICAO has estimated that carbon offsetting will cost operators 0.2-0.6 percent of total revenue from international aviation beginning in 2025, and 0.5-1.4 percent from 2035.

"Today, the United States and China are expressing their support for the ICAO Assembly reaching consensus on such a measure," the two countries said in a joint statement earlier on Saturday.

The statement, released ahead of a G20 summit in the Chinese coastal city of Hangzhou, said both countries "expect to be early participants in the measure and volunteer to join".

In a separate statement, the European Civil Aviation Conference (ECAC), a grouping of the EU and 16 other countries, said it would join the market-based plan from the outset and urged all other major airline operating states to do so.

Participation by China, which as a developing country has traditionally been opposed to any binding emissions regime for its industries, is considered crucial to any deal, and experts say they expect it to favour Chinese airlines at least in the initial phase.

"It is not an issue for China to sign up for the ICAO deal, as the mitigation actions are voluntary until 2026," said Chai Qimin, a researcher with China's National Center for Climate Change Strategy and International Cooperation (NCSC).

Chai said the deal could also favour China by giving it a lower share of all emissions that must be capped starting from 2020, but its participation would still depend on whether other countries could agree on terms.

China has been concerned that attempts to force its planes to buy carbon credits would represent a violation of the "common but differentiated responsibility" principle that says developed countries should take the lead in cutting emissions.  

Negotiations are expected until the ICAO meets on Sept. 27.

"There are a lot of details that will determine the level of ambition," said Li Shuo, climate adviser with Greenpeace.

While China had been more "progressive" when it came to the Montreal protocol and the phasing out of CFCs, it was showing fewer signs of movement on aviation, he said.

Annie Petsonk, international counsel at the Washington D.C.-based Environmental Defense Fund, said 80-90 percent of emissions above 2020 levels would need to be covered by the agreement for the civil aviation sector to hit a long-term target of carbon-neutral growth.

As an aviation powerhouse, China's participation in the deal's initial voluntary phases from 2021 to 2026 would likely be required to hit that 80 percent target, according to calculations by the non-profit International Council on Clean Transportation.

The council's Dan Rutherford has said China's absence from first phases "would definitely be a big hole in the coverage".

On Thursday, the European Commission's director-general for transport urged countries to join the deal.

"Our aim must be also to try to maximize the coverage and to try to have all the key aviation nations opting in," said Henrik Hololei during an environment committee hearing.

China declined to cooperate with EU efforts to compel international airlines to buy carbon credits from its emissions trading scheme to cover flights into European airports, forcing the EU to suspend the plan.

European legislators also remain sceptical of the draft ICAO resolution, arguing it falls short of EU ambitions.

Some members of the EU parliament say the draft does not go far enough to justify extending the exemption for international flights from the EU's own aviation emissions trading scheme beyond 2016.

The EU has to decide whether to continue exempting international flights by the end of the year.

The Civil Aviation Administration of China would not comment on China's position, but Chai Haibo, vice-general secretary of the China Air Transport Industry Association, said the industry would support whatever decision the government made.

"Multinational negotiations under a government framework are more favourable, and we hope it will result in an acceptable deal to all parties," he said.

(Reporting by David Stanway in Shanghai, Kathy Chen in Beijing, Allison Lampert in Montreal, Julia Fioretti in Brussels, Valerie Volcovici in Washington and Victoria Bryan in Frankfurt; Editing by Robert Birsel, Greg Mahlich)

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