Investor Relations Presentation

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• Investor Relations Presentation
• September 2008

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Cautionary Statement RegardingForward-Looking
Statements

• This presentation includes forward-looking
  statements within the meaning of Section 27-A of
  the Securities Act of 1933, and Section 21-E of
  the Securities Exchange Act of 1934. Such
  statements include declarations regarding the
  intent, belief, or current expectations of the
  company and its management. Prospective
  investors are cautioned that any such
  forward-looking statements are not guarantees of
  future performance, and involve a number of risks
  and uncertainties that can materially affect
  actual results as identified from time to time in
  the companys reports and registration statements
  filed with the Securities and Exchange
  Commission. Forward-looking statements provided
  herein as of a specified date are not hereby
  reaffirmed or updated.

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Introduction to Covanta

• Worlds largest owner/operator of
  Energy-from-Waste (EfW) facilities
• Business serves two key markets addresses two
  key issues
• Waste Disposal
• Superior sustainable alternative to landfills
  cleaner preserves open spaces
• Generation of Clean, Renewable Power
• Entire process results in net GhG reductions
• Complementary businesses include
• Biomass and other renewable energy generation
• Waste procurement and transfer stations

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Key Investment Considerations

• Largest player in a growing niche (EfW) with high
  barriers to entry
• Contracted revenues provide predictable base
  business
• Increasing exposure to electricity pricing
  provides upside when fossil fuel prices rise
• Strong balance sheet and free cash flow
  generation support growth initiatives
• Stability and Growth consistent operating
  performance coupled with increasing expansion and
  greenfield opportunities

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How does EfW Work?

• Municipalities and others pay us to dispose
  of waste
• Technologically advanced facilities combust
• waste, our fuel, at high temperatures
• Resulting steam is either sold directly or used
  to make electricity for sale
• Metals are retrieved and recycled
• Ash residue is buried or recycled for use in
  construction and road
  building applications

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Benefits of EfW

• Environmentally sustainable waste disposal
• Most attractive solution after recycling
• Waste volume reduced by 90
• Reduces landfill usage and long-haul transport
• Generates clean, reliable energy from renewable
  fuels
• U.S. EPA states EfW produces electricity with
  less environmental impact than almost any other
  source
• Baseload power 24/7
• Reduces greenhouse gas emissions combats global
  warming
• 11 CO2 offset for each ton of waste processed
• Fewer fossil fuels burned 1 ton of waste ¼ ton
  of coal
• Methane from landfills global warming capacity
  20 times CO2

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Global Drivers for EfW

• Increasing waste generation population growth
  urbanization
• Landfill capacity constraints legislative
  directives to reduce landfill usage
• Climbing fossil fuel prices reserves being
  depleted
• Demand for renewable power generation
• Focus on energy security and diversity
• Growing attention to climate change desire to
  reduce greenhouse gas emissions

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Global Waste Management

• EfW 0.2 Billion tons Recycling 0.5 Billion
  tons Landfill 1.2 Billion tons

Western Europe 400 EfW facilities
U.S. 90 EfW facilities
Asia 300 EfW facilities
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Substantial Growth Potential

• Waste generation increasing with population and
  income growth
• Landfilling still the predominant disposal method
• China approximately 280 million tons
• U.S. approximately 250 million tons
• UK and Ireland approximately 50 million tons
• Reduce. Reuse. Recycle. Then recover waste to
  watts!

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Covantas Competitive Advantages

• Operational Expertise
• gt 20 years experience design, construction,
  operations maintenance
• Operate every commercially viable EfW technology
• Since 1992, EfW boiler availability generally
  exceeds 90
• Senior facility management 17 years average
  experience
• Recipient of numerous environmental and safety
  awards
• Global presence local experts and relationships
• Willingness and ability to commit capital
• Strong track record of successful public/private
  partnerships

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Growth Strategy

• Maximize long-term value of existing portfolio
• Extend contracts for operation and waste delivery
• Implement productivity enhancements
• Facility expansions
• Acquisition and greenfield development
• North America EfW, renewable energy
  complementary businesses
• Europe primarily EfW focus on UK and Ireland
• Asia primarily EfW focus on China
• RD Invest in new technologies

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U.S. 85 of CVA Revenues

• Handle over half of U.S. EfW volume (16 of 30
  million tons) or 5 of post-recycled MSW
• Produce almost 10 of Americas non-hydro
  renewable electricity enough to power over a
  million homes
• Operate in 18 states (assumes ME acquistion
  closes), concentrated in the densely populated
  Northeast
• 35 EfW 8 biomass (assumes ME acq. closes), 4
  landfill gas facilities 2 hydro

Covanta EfW Facility Locations by State
Annual Tons Processed by State
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U.S. - Strong Fundamentals

• Waste Disposal
• Recession resistant, non-cyclical business
  historical long-term growth rate of 3
• Rising prices due to capacity constraints
  barriers to entry
• Higher diesel costs and state landfill tax make
  long-haul disposal less attractive
• Power Production
• Rising prices due to higher demand higher
  fossil fuel prices
• Energy security concerns
• Energy-from-Waste - Opportunities for new
  capacity re-appearing
• Growing interest in integrated waste management
  and renewable energy
• Concern with global warming and reducing carbon
  footprint

Average PJM Electricity Price Trends
Note PJM (Pennsylvania, New Jersey, Maryland
grid) East Zone (LMP) Source PJM Day-Ahead
Spot Market Price. 2008 YTD data through August.
Source EPA
Source EPA
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Typical U.S. EfW Contract Structures

• Waste disposal contracts are structured as either
  tip fee or service fee
• Service fee facilities can be owned and operated
  by Covanta or just operated
• Prefer longer term contracts to ensure fuel
  supply
• Energy revenue traditionally under long-term
  contract portfolio shifting to shorter term
• EfW projects generally financed with municipal
  bonds
• Project debt usually paid over term of waste
  disposal contract ( 20 years)
• Service fee contracts include debt service
  payments
• Debt free facilities after initial contract period

Facilities by Contract Type
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North American Initiatives

• Contract roll-overs potential energy revenue
  upside
• Indianapolis and Hempstead
• Expansions of existing facilities
• Florida and Hawaii
• Pursuing greenfield projects
• Vancouver
• Toronto
• Maryland
• MA Activities
• Tulsa
• Maine biomass facilities
• Transfer stations

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U.S. Energy Policy

• Federal and numerous state laws considers EfW a
  renewable energy source
• Still no comprehensive U.S. renewable energy or
  climate change policy
• Potential upside if EfW included in Federal
  renewable energy portfolio standards
• Exemption from carbon caps would provide business
  advantage over fossil fuels
• Recognition of GhG offsets would offer
  substantial upside

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Growth Drivers - Europe

• Widespread acceptance of EfW is creating
  opportunities
• EU Landfill Directive supports EfW,
  disincentives for landfilling
• Reduce landfilling of biodegradable MSW by 65
  from 1995 disposal levels by 2020
• U.K. and Ireland Significant efforts needed to
  meet EU regulations
• U.K. environmental agency (DEFRA) estimates EfW
  will need to increase from 9 of waste disposal
  to 27 by 2020
• U.K. market expect 10 million tons of new EfW
  capacity to be required
• High market tip fees (gt100 per ton of MSW) and
  electricity rates
• Additional opportunities in continental Europe

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UK/Ireland Initiatives

• Dublin 1,700 tpd facility construction
  expected to begin near end of 2008
• UK Large number of municipalities considering
  projects
• Currently, short listed on several
• Additional opportunities are unfolding each year
• Covanta Infrastructure Preparedness
• Office in Birmingham being expanded to meet
  heightened level of activity
• Employing locals with local expertise and
  valuable relationships

Artists Rendering - Dublin
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Growth Drivers Asia/Pacific

• China significant opportunity
• 160 - 170 cities with population of 1 million
• Annually generating 280 million tons of waste
  (similar to U.S. market)
• Approximately 2.0 of waste was converted to
  energy in 2005
• National Plan 30 of waste to be channeled to
  EfW by 2030
• Estimates predict 50 million tons of new EfW
  capacity to be built by 2020

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China Initiatives

• Pursue bid opportunities with strong local
  partners
• JVs with Chongqing Iron Steel and Guangzhou
  Development Group
• Currently own stakes in two 1,200 tonnes per day
  EfW facilities via JVs
• Recent contract award for new 1,800 tonne per day
  facility in Chengdu

SanFeng Covanta Tongxing EfW Plant Chongqing,
China
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Attractive Economics

• Stable business model
• Long-term contracted revenue stream
• Credit-worthy clients municipalities and
  utilities
• High margins and low capital expenditure
  requirements
• Annual maintenance capex 60 million (4 of
  revenue)
• Strong operating cash flow to fund growth (1)
• 2008 operating cash flow guidance 380 to 420
  million
• 2008 scheduled project debt amortization of 167
  million (with approximately 20 million funded
  from restricted cash)
• Strong balance sheet
• Borrowing power increasing as facilities become
  debt-free

(1) As of July 29, 2008. This information is not
being reaffirmed or updated as of the current
date.
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Financial Summary
(1) Non-GAAP financial measure Please see
second quarter press release for discussion of
use of Non-GAAP financial measures and
calculation of Adjusted EBITDA.
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Consistent Financial Performance and Growth
Revenues

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Consistent Financial Performance and Growth
Operating Cash Flow (1)
2008 Guidance 380-420 million (3)

• Operating Cash Flow is defined as the GAAP
  measure cash flow provided by operating
  activities.
• Includes the results for Covanta ARC Holdings
  from June 25, 2005 through December 31, 2005.
• As of July 29, 2008. This information is not
  being reaffirmed or updated as of the current
  date.

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Consistent Financial Performance and Growth
Adjusted EBITDA (1)
2008 Guidance 550-575 million (3)

• Please see second quarter press release for
  discussion of use of Non-GAAP financial measures
  and calculation of Adjusted EBITDA.
• Calculated for Covanta Energy Corporation.
• As of July 29, 2008. This information is not
  being reaffirmed or updated as of the current
  date.

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Computation of Adjusted EBITDA
(1) As of July 29, 2008. This information is
not being reaffirmed or updated as of the current
date. Please see second quarter press release
for discussion of use of Non-GAAP financial
measures and calculation of Adjusted EBITDA.
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Reconciliation - Cash Flow Adjusted EBITDA
(1) As of July 29, 2008. This information is
not being reaffirmed or updated as of the current
date. Please see second quarter press release
for discussion of use of Non-GAAP financial
measures and calculation of Adjusted EBITDA.
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Key Investment Considerations

• Largest player in a growing niche (EfW) with high
  barriers to entry
• Contracted revenues provide predictable base
  business
• Increasing exposure to market electricity pricing
  provides upside when fossil fuel prices rise
• Strong free cash flow generation and balance
  sheet support growth initiatives
• Stability and Growth consistent operating
  performance coupled with increasing expansion and
  greenfield opportunities