JANUARY 26,2007 - COVANTA PRICES OFFERINGS OF $325,000,000 OF SENIOR CONVERTIBLE DEBENTURES AND 5,320,000 SHARES OF COMMON STOCK

FAIRFIELD,NJ, January 26, 2007. Covanta Holding Corporation (NYSE: CVA) ("Covanta") today announced that it has priced its offering of $325 million aggregate principal amount of 1.00% senior convertible debentures due 2027 (the "Debentures"), which amount does not include the underwriters' option to purchase up to an additional $48.75 million aggregate principal amount of the Debentures to cover overallotments, if any.

The Debentures will be convertible under certain circumstances into Covanta's common stock at a conversion rate of 35.4610 shares per $1,000 principal amount of Debentures, subject to adjustment in certain circumstances, which represents a conversion price of $28.20 per share.  The conversion price is a 20.0% premium to the offer price of our common stock in our concurrent common stock offering described below, which is approximately a 1.1% discount to the closing price of Covanta's common stock on January 25, 2007. Upon conversion, Covanta will pay cash and, if required, shares of Covanta common stock. In addition, the Debentures will accrue contingent interest commencing with the interest period beginning on February 1, 2012 under certain circumstances.

The Debentures will be redeemable at Covanta's option on or after February 1, 2012 at a redemption price equal to 100% of the principal amount of the Debentures being redeemed, plus accrued and unpaid interest.  The Debentures will also be subject to repurchase at the option of the holders on February 1, 2012, February 1, 2017 and February 1, 2022 and upon the occurrence of certain fundamental changes at a repurchase price equal to 100% of the principal amount of the Debentures being repurchased plus accrued and unpaid interest.

Covanta also announced today that it has priced its offering of 5,320,000 shares of common stock, which does not include the underwriters' option to purchase 798,000 additional shares to cover overallotments, if any, at a price of $23.50 per share.

These offerings are part of Covanta's previously announced recapitalization plan, which includes tender offers for any and all of the approximately $612 million in principal amount of outstanding notes (the "Notes") issued by certain of Covanta's intermediate subsidiaries.  Assuming that Covanta and its wholly-owned subsidiary, Covanta Energy Corporation ("Covanta Energy"), are successful in refinancing Covanta Energy's existing credit facilities with new senior secured credit facilities in the amount of up to $1.3 billion (the "New Credit Facilities"), which are currently being negotiated by Covanta Energy, Covanta intends to use the proceeds from the concurrent offerings of the Debentures and the common stock, as well as cash on hand and a portion of the borrowings under the New Credit Facilities, to repurchase all of the Notes that are properly tendered pursuant to Covanta's concurrent tender offers and related consent solicitations.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such states. This news release also does not constitute an offer to buy or the solicitation of an offer to sell any securities nor does it constitute an offer to purchase the Notes or a solicitation of consents with respect to the Notes. The tender offers and the related consent solicitations are made solely by means of an Offer to Purchase and Consent Solicitation Statement dated January 23, 2007 and the related Letter of Transmittal and Consent delivered to holders of the Notes by Covanta upon the terms and subject to the conditions therein.

About Covanta Holding Corporation
Covanta Holding Corporation is a New York Stock Exchange listed company engaging in waste disposal, energy services and specialty insurance through its subsidiaries. Covanta's subsidiary, Covanta Energy Corporation, is an internationally recognized owner and operator of energy from waste and power generation projects. Covanta Energy's energy from waste facilities convert municipal solid waste into renewable energy for numerous communities, predominantly in the United States.

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 the Prospectus Supplements filed by the Company with the Securities and Exchange Commission with respect to the offerings of common stock and Debentures by the Company and in other securities filings by Covanta or its subsidiaries. 

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. 

Lehman Brothers Inc., J.P. Morgan Securities Inc. and Merrill, Lynch, Pierce, Fenner & Smith Incorporated are serving as joint book runners for the public offerings of the Debentures and Covanta's common stock. When available, copies of the prospectuses relating to the respective offerings may be obtained from: Lehman Brothers Inc. at c/o ADP Financial Services, 1155 Long Island Avenue, Edgewood, N.Y. 11717 or by e-mail at monica_castillo@adp.com or by faxing requests to (631)254-7268; J.P. Morgan Securities Inc. by calling toll free 1-866-430-0686 or at 4 Chase Metrotech Center, CS Level, Brooklyn, NY 11245 Attn: Prospectus Department; or Merrill Lynch, Pierce, Fenner & Smith Incorporated at 4 World Financial Center, New York, New York 10080.

Contact:
Gavin Bell
Covanta Holding Corporation
973-882-7107