John Rentoul: Darling was bad. Cameron worse. But even he was eclipsed by the performance of Balls

Alistair Darling could have impressed in two ways yesterday. He could have delivered a strikingly green Budget and he could have shown intellectual rigour in understanding market economics. Best of all, he could have done both, using market mechanisms to achieve green objectives. Instead, he did neither.

How relieved he must have been, then, to sit down and bathe in the soft blather of David Cameron's response. With large expanses of the centre ground between them undefended, Cameron could have reasserted his green credentials – the very credentials that did so much to reposition the Conservative brand, but which seem to have been quietly forgotten now that the brand has been detoxified. He could have gently mocked the Labour Government's failure to come to terms with the economics of supply, demand and consumer sovereignty. He could have pointed out the irrelevance of a bureaucratic scheme such as a £12.5m fund for women entrepreneurs. Or he could have said that if people want long-term, fixed-rate mortgages, they can have them: why should the Government try to steer them in that direction just because they are popular in Denmark? But Cameron did neither.

How relieved the Conservative leader must have been, then, to have been rescued by the volubility of Ed Balls. The heckling from what Cameron called "the minister for children" provided the perfect foil for a parliamentary performance of little substance but which pleased his backbenchers. I remember discussing with Cameron, about a year ago, the possibility that Gordon Brown might promote Balls to Chancellor. "God, give me Balls!" exclaimed Cameron, turning his eyes to the heavens. Yesterday, we saw why God – and Gordon – did not do so. By failing to sit nicely, as they say in primary schools around the land, Balls gave Cameron the distraction he needed from what would otherwise have been commented on as a notably weak Budget reply.

Cameron could have forensically analysed the gap between the Chancellor's words – "our greatest obligation to the future must be to tackle climate change" – and his actions – a further tweaking of vehicle excise duty and a 10 per cent rise in plane duty. Instead, he stuck to soundbites, saying that over the credit crunch the Chancellor was suffering a "credibility crunch".

Of course, part of the problem, for both sides of the House of Commons, is that serious green policies require stiff green taxes that would change behaviour sharply. That means, inevitably, big increases in the cost of energy. But Darling's cursory paragraph on fuel poverty – so cursory that Tory MPs noticed, and jeered when he moved quickly on – did not even acknowledge the social and political problem. It consisted merely of a statist exhortation to utility companies to raise their spending on "social tariffs" from £50m a year to £150m. But if Cameron does not want to get involved in the difficult question of how to reconcile social justice with the use of market incentives, surely Nick Clegg, new leader of the greenest of the three main parties, would? No chance. One of Clegg's few themes since becoming leader has been to demand state action and state subsidy, all the time implying that fuel prices are too high.

The one new green measure in the Budget, the plastic bag tax, symbolised everything that was wrong with it. Plastic bags are important but they are a third-order green issue. Even then, a tax is only promised if voluntary action by shops doesn't work. And even then, if there is a tax, its proceeds will go to "environmental charities". Why? Who will choose which ones? Why should anyone have confidence that they will do any good? Almost the whole point of green taxes – at least the Conservatives understand this – is that they have to be given back to the taxpayer as tax cuts elsewhere. That way they can command public support for what they are – attempts to incentivise green behaviour and penalise polluting activities – rather than as stealth taxes.

Darling's understanding of market mechanisms is grudging and ungreen. The only radical policy in the Budget – we know it was radical because he suddenly used the word, which stood out among all the stability and resilience – was the resurrection of road pricing. Now that is pure and admirable market economics, putting a price on a scarce resource – namely road space – so that it may be allocated most efficiently.

But it isn't green. The whole purpose of road pricing is to fit more cars on to the road network without causing gridlock, by pricing people out of the most congested roads at the most congested times. More than that, it is never going to be elector-ally acceptable, because the losers will always make more fuss than the winners, as they did last year in the famous Downing Street e-petition.

One Tory MP – Jacqui Lait, since you ask – called it "the Carrier Bag Budget". Which was a good description. It was a flimsy, disposable but long-lastingly irritating political event. It was an unrecyclable chain of missed opportunities: Darling was saved by Cameron, who was saved by Balls.

John Rentoul is chief political commentator for The Independent on Sunday