The green blogosphere generally reacted with chuckles or consternation to Planktos’ announced plans to dump tons of iron into the ocean to, you know, see what happens. Gar Lipow took the article as another excuse to bash carbon offsets.

To follow the logic, you first have to know why anyone would want to dump several tons of iron into the sea. Planktos hopes to demonstrate that seeding the oceans with certain nutrients is a credible way to stimulate plankton blooms. It further hopes to demonstrate that these blooms are a credible way to sequester atmospheric carbon. Carbon markets provide the incentive for this quixotic undertaking. If the experiment is successful — a big if — Planktos could one day tap into the many billions of dollars available for carbon reduction projects.

To Gar’s way of thinking, this is another demonstration of the deep evil of carbon markets. And to be perfectly clear about this, I share his lack of enthusiasm for the Planktos experiment. But to my way of thinking, the story is an aberrant example of a general dynamic that is one the positive features of carbon markets.

It is important to stress that regulated carbon markets have never recognized offsets generated from iron fertilization projects. Such schemes are highly speculative, and as such are not eligible to be a source of offsets. They likely never will be. Offsetting projects have to clear significant bars for scientific credibility and quality of implementation. Planktos is conducting its experiment in the hopes of someday clearing those hurdles, in roughly the same way the way that biotech companies perform research in the hopes of one day creating a drug that passes clinical trials.

Of course, Planktos could try to sell its offsets in the voluntary market, which are presently unregulated. But no credible retailer would be willing to offer them unless, again, scientific credibility could be established. The voluntary markets tend to follow the lead of the regulated markets on these matters, not vice versa.

So basically we have a situation in which a private company is putting private capital into research and development of a possible climate change mitigation strategy. The scheme may or may not be crackpot, but no public funds are at risk, and, hey, there are even a few credible people who thinks that such a strategy might work.

The downside in this case, as Gar notes, is that the experiment is possibly reckless. I personally would rather not see tons of iron dumped into the ocean, although, to be fair, this experiment has been conducted many times in the past without any obvious ill effects.

In general, all policy solutions have downsides and unintended consequences. Regulatory actions have weird loopholes (see, e.g., CAFE and SUVs); subsidies are easily politicized (cough, ethanol, cough); taxes are blunt policy instruments and widely hated.

And carbon markets, along with a host of other issues, have Planktos. If this oddball project were representative of carbon offsetting projects in general, we might have reason to worry. Fortunately, it is not. And the general mechanism in play here — rewarding innovators for coming up with new carbon mitigation strategies and technologies — is a dynamic that should be encouraged.