On paper, Big Tech is an industry that’s big on renewable energy. The question is how much of that is just paper.

According to a Bloomberg report published Wednesday, Big Tech companies have found a workaround in the carbon credit system to downplay their greenhouse gas emissions, which are ballooning due to the extra energy required to feed the AI systems they’re all chasing to perfect. This comes a week after the Financial Times reported that Big Tech firms are heavily lobbying to change how pollution is reported. 

Accounting Acrobatics

Bloomberg found that Big Tech firms including Meta, Amazon, and Microsoft are buying something called unbundled renewable energy certificates (RECs) to balance the books in their carbon accounting. These credits let you offset emissions on paper; if you buy enough unbundled RECs, you can effectively swap power that you used from a fossil fuel power plant for renewables in your paperwork. 

Bloomberg calculated the difference in the companies’ emissions reporting if you take unbundled RECs out of the equation, relying on data they gave to nonprofit environmental watchdog the Carbon Disclosure Project:

• Amazon reported 2.9 million tons of carbon dioxide emissions, but Bloomberg’s analysis found that once you remove the REC offsets, the actual carbon dioxide emitted was around 11.4 million tons.
• Microsoft disclosed 288,000 tons, but Bloomberg’s analysis pegged its emissions closer to 3.6 million tons.

The FT’s report also found discrepancies between the emissions Big Tech reports on paper and what actually gets pumped into the atmosphere. The FT’s analysis of Meta’s 2022 emissions found its claimed 273 tons looked more like 3.9 million. Bloomberg was slightly more generous, putting Meta’s total emissions at 741,000 tons, so there is still some room for interpretation in terms of the math. Per the FT, Big Tech companies including Amazon and Meta have banded together to push a new kind of carbon accounting that one source said would “rig the rules so the whole ecosystem can obfuscate what they are up to.”

ESGee Whiz: The biggest Big Tech companies feature prominently in ESG (environmental, social, governance) stock portfolios because as big companies go, they’re seen as relatively clean and keen on renewable energy. But the guzzling of energy (not to mention water) by AI-focused data centers, plus a growing dissent over carbon-credit systems like the RECs, could send some tremors through their ESG foundations.

Now that’s a bullseye.

If last week’s data dump from the US Commerce Department showing white-hot consumer spending in July was the shot, this week’s news is the chaser. On Wednesday, both Target and TJ Maxx posted stellar earnings results on the strength of the incredibly resilient US consumer. Unfortunately, not every retailer is feeling the love.

Retail Therapy

It can be hard to get a grip on the economy; July’s spending numbers were generally seen as a happy surprise. But, also on Wednesday, the US Labor Department announced that it may have previously overestimated the amount of nonfarm payroll positions added to the US economy in the 12 months through March 2024 by as much as 818,000. Either way, there’s now plenty of evidence that the typical consumer is engaging in some serious shopping, whether they’re concerned about belt-tightening or not.

In fact, both Target and TJ Maxx may just be the beneficiaries of an overall trend of budget-consciousness:

• In May, Target announced it would be slashing prices on 5,000 different items. In its call with investors Wednesday, the company said decreased prices helped increase foot traffic to stores — fueling $25.5 billion in revenue and a 42% year-over-year net income spike.
• TJ Maxx, which owns Marshalls and HomeGoods, pegged their quarterly success in part on offering goods “at prices generally 20% to 60% below full-price retailers’ regular prices on comparable merchandise.” The company also said its consolidated comparable store sale increase of 4% was “entirely driven by an increase in customer transactions.”

Over in the mall, struggling big-box retailer Macy’s had another brutal day. Net sales were down roughly 4% year-over-year, missing expectations. Company leadership has at least one turnaround plan. In a call with analysts, CEO Tony Spring said Americans may turn toward the “escapism and entertainment” offered by shopping amid a potentially stressful election season. Hey, that actually sounds like a decent strategy.

The Great Walmart: While Target and TJ Maxx are enjoying US consumers, Walmart is frustrated by the increasingly tired Chinese consumer. On Wednesday, the big-box retailer dumped its roughly 10% stake in Chinese e-commerce player JD.com amid flagging sales.

If two coal companies are pressed together, is the result a diamond — or is it just “$110 million to $140 million of annual cost and operational synergies”?

Arch Resources and Consol Energy are about to find out. The two US-based companies announced plans for an all-stock merger of equals Wednesday to create a new $5.2 billion coal giant called Core Natural Resources.

Form a Coal-ition

The energy sector has seen a flurry of deals this year, including Diamondback Energy’s proposed merger with Endeavor Energy Resources and ConocoPhillips’ proposed acquisition of Marathon Oil. While it’s mostly been in oil and gas, the coal sector hasn’t gotten the coal-d shoulder: In June, Glencore closed its acquisition of coal assets from Canada’s Teck Resources, and Anglo American will take bids on its Australian metallurgical coal mines next month after rejecting a $49 billion takeover offer by BHP.

Once seen as on the wane, coal got a second life among investors after energy markets were thrown into disarray by the war in Ukraine. Electricity demand has kept soaring globally, adding to favorable short- to medium-term conditions for the Arch-Consol tie-up:

• S&P Global Commodity Insights estimated that, in 2023, the US was set to take 70% (133,000 megawatts) of its coal power capacity offline by 2035. But this year, that’s fallen to about 105,000 megawatts.
• Pittsburgh metro-based Consol shareholders will own 55% of the new company and shareholders in St. Louis-based Arch will own 45% — Consol shares, up 0.86% Wednesday, were looked upon more favorably than Arch shares, which fell nearly 2%.

Bad Santa: In what might be a stocking stuffed with coal for the coal business, China — which accounts for half of global coal demand, according to the International Energy Agency — announced Wednesday that it’s investing $31 billion to build 11 new nuclear plants in the next five years.