If you listen carefully you can hear the sabres being rattled from here.

Oil giant Shell has become the latest to warn the EU it better play nice and scrap plans to tighten up its faltering emissions trading scheme (ETS) or the company will pick up its ball and go and play elsewhere.

Echoing comments from many within the steel and concrete industries, Shell France director Christian Balme said that if the EU persists with plans to force heavy polluters to buy emissions credits at auction from 2013 then its profitability in Europe will be wiped out and there will "be no more investments by Shell in Europe".

According to Shell, it is in favour of cap-and-trade schemes (isn't it funny how all company's are in favour of cap-and-trade schemes for as long as they don't require them to do anything), but forcing it to pay for all its carbon credits would be an unbearable burden.

The first question to ask is does anyone really believe that Shell will make good on this threat? Is it actually going to deliver "no more" investments in Europe in the event of it being forced to pay for its pollution?

Of course, if extra costs are imposed (and you have to remember that is kind of the point) then undoubtedly some investments will be diverted to regions with more relaxed regulatory environments. But "no more" investments in one of the largest markets on the planet? Seriously?

Is it not equally likely that Shell will try and shift some investments overseas, but, faced with the higher cost of polluting will begin to invest seriously in ensuring its European operations are as carbon efficient as possible.

Moreover, the threat to shift investment overseas is dependent on the assumption that there will be a more attractive overseas location available. But the world's politicians are even now debating how to ensure this is not the case as they push for a global cap-and-trade scheme largely based on the EU model to be included as part of a post Kyoto agreement. Meanwhile, Europe's leaders are openly threatening to slap tariffs on carbon intensive imports if other countries won't co-operate.

Is Shell really going to go to the hassle of shifting its investment plans if the oil that it has refined in a new plant in Morocco, for example, has to pay a sizable tariff to be imported to the EU? Will it really shun Europe altogether in the hope of getting a couple of year's grace before a post Kyoto trading scheme hits its new plants. Again would it not be simpler and easier for it to continue invest in minimising costs from the ETS by focusing on cutting emissions from its EU operations?

It is informative that when I rang Shell's press office and asked if it was the company's official position that it would cease investment in Europe in the event of auctioned emission credits the spokesman on the other end of the line was extremely evasive. Shell won't commit to such a plan because it is never going to happen.

It is easy to understand Shell's nervousness over the EU's plans, because ultimately they are designed to eradicate its oil-based business model. The whole point of the polluter pays principle is to accelerate the development of low carbon technologies and business models and wean us off of fossil fuels. Shell is part of a dying industry, it is just that it has no intention of going quietly.

What Europe's politicians and business leaders need to remember is that while many firms may threaten to leave as a result of the EU's climate change plans few actually will, particularly if  the games of international diplomacy currently being played ensure that there is no competitive advantage for them to gain by doing so.

Moreover, where those firms that fail to adapt do end up declining - we're looking at you Shell - it is worth remembering that the jobs that are lost will be largely replaced by the emerging clean tech industry. It is worth noting that as Shell threatens to take jobs overseas the German government is reporting that by 2030 its renewables sector will be as big as its car industry.

Managing the decline of an industry, and the job losses and economic pain that go with it, is one of the ultimate tests of a politician's skill and strength and it looks like leaders across Europe are about to get tested.

How well they perform will determine both the entire bloc's credibility as a leader in the fight against climate change and all our chances of transitioning to a low carbon economy.

We can only hope they realise this and tell Shell and its supporters precisely what they can do with their rattling sabres.