MAY 29, 2007 - COVANTA ANNOUNCES ACQUISITION OF TWO BIOMASS ENERGY FACILITIES

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

FAIRFIELD, NJ, May 29, 2007 - 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.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute "forward-looking" statements as defined in Section 27A of the Securities Act of 1933 (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the "PSLRA") or in releases made by the Securities and Exchange Commission, all as may be amended from time to time.  Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Covanta and its subsidiaries, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.  Statements that are not historical fact are forward-looking statements.  Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words "plan," "believe," "expect," "anticipate," "intend," "estimate," "project," "may," "will," "would," "could," "should," "seeks," or "scheduled to," "proposed," or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions.  These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the "safe harbor" provisions of such laws.  Covanta cautions investors that any forward-looking statements made by Covanta are not guarantees or indicative of future performance.  Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to Covanta, include, but are not limited to, those factors, risks and uncertainties that are described in Item 1A of its Annual Report on Form 10-K for the year ended December 31, 2006, and in subsequent securities filings by Covanta.
 
Although Covanta believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any forward-looking statements.  Covanta's future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this press release are made only as of the date hereof and Covanta does not have or undertake any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.

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

For media inquiries, please contact:
Kate Casolaro
(617) 443-9933 x338
kcasolaro@rasky.com