Carbon offsetting

Hooray for George Monbiot and The Guardian for making that vital point at the end of your post. The carbon "market" is composed of many fictions, like this one, that need nailing. At root, they all resolve to people's insistence on treating this as a moral issue rather than a market issue.

In the moral version of the climate-change debate, various activities are either "good" or "bad". If they are "good", they are good regardless of circumstances and should be encouraged and subsidised to maximise the amount of good that they bring, as though there is no such thing as too much of a good thing. If they are "bad", they are always bad and completely bad, with no redeeming features that people of conscience might choose to weigh in the balance.

It is anathema to say so amongst those who treat issues such as climate change as a question of morality - good and bad, right and wrong - but in reality nothing in this or most other fields is inherently good or inherently bad. Most things are simply more or less appropriate to their circumstances.

Recycling is not inherently good. In some circumstances it is the best use of resources, but in others, it is neither economically nor environmentally the best option.

Renewable energy is not inherently good. In some circumstances it delivers our energy needs cleanly and efficiently, but in others, it is so inefficient that the money would have been far better spent on something else.

Nuclear energy is neither inherently good nor inherently bad (there are plenty of fanatics on both sides of that argument). It has benefits and it has disadvantages. The balance should be discovered not in some moral debate, but by creating markets in which the values of the benefits and the disadvantages can be discovered without coercion or subsidy. 

Conservation is not inherently good. Saving an endangered species may be more important than almost any amount of economic benefit, but saving small areas of habitat of once threatened but now commonplace species, like the Great-Crested Newt, may do far more harm to people and their prospects than the benefit to the species. As care for the environment is a rich man's luxury, accepting some habitat destruction if the economic benefits are sufficiently substantial may be not only to the benefit of the local human population, but also to the local wildlife.

Trains and buses are not inherently good, and cars and planes are not inherently bad. A train or bus with low occupancy levels will be worse for the environment than a car or plane with high occupancy levels, even assuming that one could substitute practically for another for the intended purpose (which is often not the case). Energy-consumption in transit is not the only impact on the environment, and the environment is not the only consideration that matters. Where time is of the essence, flying may be justifiable even where its environmental impact is greater than other forms of transport. No matter what the environmental impact, in some circumstances an air ambulance will be the better option than a road ambulance. It would be the optimal solution, if economics were not a factor, in many more circumstances than those in which it is used. We recognise that economics must be a factor. But only in very limited circumstances like these, apparently. For more general use, to satisfy needs and wants, the choice between air, road and rail is often viewed as a moral, not an economic issue, where some technologies are "right" and some are "wrong". But it is in the arena of wants and needs that economics has the most important part to play in helping us to evaluate our choices.

Real markets take account of time. Future values are discounted. They reflect reality in more than just an economic sense - something certain now is worth more than something uncertain in the future from an environmental as well as an economic perspective.

Morals take no account of time. If something is either "good" or "bad", it is very difficult to discount the "goodness" for the fact that it will occur later.

You cannot do a moral calculation to weigh the total "rightness" of something "good" (say, planting trees) against the total "wrongness" of something "bad" (say, flying). You can weigh the carbon (effectively), but if you do an economic comparison of carbon emitted and carbon absorbed, you get an answer that those who like to think in "good" and "bad" terms don't like - most of the time it is not effective from an environmental or economic point-of-view to plant trees to compensate for carbon emissions. But this can't be, their thinking goes, because planting trees is "good", therefore we should make it happen, therefore we must create an artificial market in which that simple calculation is obscured. So we end up with carbon markets that aren't markets in carbon at all.

People blame the markets. It is the humans who created the fraudulent markets that are to blame. And they created these fraudulent markets because they didn't believe in real markets. The problem with carbon markets is not, as most environmentalists would have it, that economics has no answer (or the wrong answer) to environmental problems, but that politicians and environmentalists do not uncerstand economics and have frustrated the creation of a real market in carbon. If we had a real market in carbon, it wouldn't be quite so easy for Tony to pick his environmental winners and losers.