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Covanta Buys Two California Biomass Facilities for $51 MIllion

Date: May 29, 2007

Source: Covanta Holding Corporation

Acquisition Significantly Expands Covanta's Strategic Presence in California's Renewable Power Market

Covanta Holding Corporation (NYSE: CVA), a world leader in the development and operation of large scale Energy-from-Waste and renewable energy projects, today announced its agreement to purchase two biomass energy facilities and a biomass energy fuel management business from The AES Corporation, all located in California's Central Valley. These facilities will add 75 megawatts to Covanta's portfolio of renewable energy plants, which currently includes four biomass facilities and more than 30 Energy-from-Waste facilities. Covanta agreed to pay approximately $51 million for these renewable energy assets. In addition, Covanta expects to invest between $15 and $20 million in capital improvements to increase the facilities' productivity and environmental performance. Closing of the acquisition remains subject to receipt of certain regulatory approvals which are anticipated to be received during the third quarter of 2007.

"We are very excited about adding these two wood waste facilities to our portfolio," said Anthony Orlando, President and Chief Executive Officer of Covanta. "These businesses fit nicely with our core strength in making clean energy from waste and we look forward to integrating them into our existing biomass business in California. Furthermore we see strategic benefit of increasing our renewable generation portfolio, particularly in California given its nationwide leadership in setting goals to reduce greenhouse gas emissions and promote clean, renewable alternatives to fossil fuels."

Biomass energy facilities burn wood waste derived from recycling urban and agricultural timber, woodchips, sawdust, bark and tree trimmings to produce renewable electricity. In addition to the benefits of producing clean, renewable energy, biomass facilities also displace greenhouse gas emissions that may otherwise result from open burning and landfill disposal of these fuels.

Covanta is a member of the California Climate Action Registry, a distinguished group of organizations demonstrating leadership by voluntarily taking action on climate change. The Climate Action Registry is working to reach a 30 percent reduction in greenhouse gases by 2020 and has recognized biomass energy and Energy-from-Waste as valuable resources for achieving this goal.

About Covanta

Covanta is an internationally recognized owner and operator of energy-from-waste and power generation projects. Covanta's energy-from-waste facilities convert municipal solid waste into renewable energy for numerous communities, predominantly in the United States. As a world premier operator of large-scale energy-from-waste facilities, Covanta is proud to offer an environmentally sound solution to communities' solid waste disposal needs. With over 30 facilities worldwide, Covanta uses municipal solid waste as a fuel to generate clean, renewable energy. Covanta's modern energy-from-waste facilities safely and securely turn 15 million tons of waste into over 8 million megawatt hours of clean renewable electricity each year and create 10 billion pounds of steam that are sold to a variety of industries. For more information, visit www.covantaenergy.com.

For more information, contact:
Gavin Bell
Covanta Holding Corporation
973-882-7107

Or

For media inquiries:
Kate Casolaro
617-443-9933 x338
kcasolaro@rasky.com.

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