"In the past 20 years the refining industry in Europe has been very difficult," Jeroen van der Veer, the Anglo-Dutch oil giant's boss, told The Times in an early edition of its Tuesday paper.

"But if we have additional penalties because we move away from a system of free allocations to a large extent, then in such a marginal industry that is a real problem."

EU leaders hope to enact a plan to meet the bloc's goal of reducing emissions of carbon dioxide -- the main gas reponsible for global warming -- by 20 percent by 2020, compared to 1990 levels.

A widespread concern among Europeans, though, is the possibility of so-called carbon leakage, whereby heavy industry migrates out of Europe to cheaper, less-regulated countries, taking the pollution and the jobs with them.

"The (oil and chemicals) industries are very international. A lot of our refining is Middle Eastern oil, a lot of which is then exported to the US," the Shell boss said.

He continued: "In Europe our industry is already quite efficient. And if (it) is more energy-efficient than elsewhere, then you should not drive that industry away.

Van der Veer said that a level playing field globally was essential to making the carbon trading scheme work, telling The Times: "If the regional block is big enough, then that is ok. But it gets very difficult for energy-intensive industries."

"What will happen if you have to buy auction rights inside EU but not outside?"

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