FALSE2020FY0000225648131,981,775262890.100.1010100.100.1025025013613613213111us-gaap:OtherLiabilitiesNoncurrentus-gaap:OtherLiabilitiesNoncurrentus-gaap:AccruedLiabilitiesCurrentus-gaap:AccruedLiabilitiesCurrent00002256482020-01-012020-12-31iso4217:USD00002256482020-06-30xbrli:shares00002256482021-02-120000225648cva:WasteAndServiceMember2020-01-012020-12-310000225648cva:WasteAndServiceMember2019-01-012019-12-310000225648cva:WasteAndServiceMember2018-01-012018-12-310000225648us-gaap:ElectricityMember2020-01-012020-12-310000225648us-gaap:ElectricityMember2019-01-012019-12-310000225648us-gaap:ElectricityMember2018-01-012018-12-310000225648cva:RecycledMetalsMember2020-01-012020-12-310000225648cva:RecycledMetalsMember2019-01-012019-12-310000225648cva:RecycledMetalsMember2018-01-012018-12-310000225648cva:OtherRevenueMember2020-01-012020-12-310000225648cva:OtherRevenueMember2019-01-012019-12-310000225648cva:OtherRevenueMember2018-01-012018-12-3100002256482019-01-012019-12-3100002256482018-01-012018-12-31iso4217:USDxbrli:shares00002256482020-12-3100002256482019-12-3100002256482018-12-3100002256482017-12-310000225648us-gaap:CommonStockMember2017-12-310000225648us-gaap:AdditionalPaidInCapitalMember2017-12-310000225648us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-310000225648us-gaap:RetainedEarningsUnappropriatedMember2017-12-310000225648us-gaap:TreasuryStockMember2017-12-310000225648us-gaap:AdditionalPaidInCapitalMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2017-12-310000225648us-gaap:RetainedEarningsUnappropriatedMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2017-12-310000225648srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2017-12-310000225648us-gaap:AdditionalPaidInCapitalMember2018-01-012018-12-310000225648us-gaap:RetainedEarningsUnappropriatedMember2018-01-012018-12-310000225648us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-01-012018-12-310000225648us-gaap:CommonStockMember2018-12-310000225648us-gaap:AdditionalPaidInCapitalMember2018-12-310000225648us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000225648us-gaap:RetainedEarningsUnappropriatedMember2018-12-310000225648us-gaap:TreasuryStockMember2018-12-310000225648us-gaap:AdditionalPaidInCapitalMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000225648us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000225648us-gaap:RetainedEarningsUnappropriatedMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000225648srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000225648us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310000225648us-gaap:RetainedEarningsUnappropriatedMember2019-01-012019-12-310000225648us-gaap:TreasuryStockMember2019-01-012019-12-310000225648us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310000225648us-gaap:CommonStockMember2019-12-310000225648us-gaap:AdditionalPaidInCapitalMember2019-12-310000225648us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000225648us-gaap:RetainedEarningsUnappropriatedMember2019-12-310000225648us-gaap:TreasuryStockMember2019-12-310000225648us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310000225648us-gaap:RetainedEarningsUnappropriatedMember2020-01-012020-12-310000225648us-gaap:TreasuryStockMember2020-01-012020-12-310000225648us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310000225648us-gaap:CommonStockMember2020-12-310000225648us-gaap:AdditionalPaidInCapitalMember2020-12-310000225648us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000225648us-gaap:RetainedEarningsUnappropriatedMember2020-12-310000225648us-gaap:TreasuryStockMember2020-12-31cva:Facility0000225648srt:NorthAmericaMember2020-12-31utr:Txbrli:purecva:MWcva:stationcva:landfillcva:Segment0000225648cva:PassthroughcostsMember2020-01-012020-12-310000225648cva:PassthroughcostsMember2019-01-012019-12-310000225648cva:PassthroughcostsMember2018-01-012018-12-310000225648cva:PrincipalAmountMembercva:DebtServiceFundsMember2020-12-310000225648cva:PrincipalAmountMembercva:DebtServiceFundsMember2019-12-310000225648cva:RevenueFundsMember2020-12-310000225648cva:RevenueFundsMember2019-12-310000225648cva:OtherFundsMember2020-12-310000225648cva:OtherFundsMember2019-12-310000225648us-gaap:ComputerEquipmentMembersrt:MinimumMember2020-01-012020-12-310000225648us-gaap:EquipmentMembersrt:MaximumMember2020-01-012020-12-31cva:report00002256482019-10-012019-10-010000225648us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2018-12-310000225648us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetGainLossIncludingPortionAttributableToNoncontrollingInterestMember2018-12-310000225648us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember2018-12-310000225648us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000225648us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetGainLossIncludingPortionAttributableToNoncontrollingInterestMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000225648us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000225648us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMembersrt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember2018-12-310000225648us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetGainLossIncludingPortionAttributableToNoncontrollingInterestMembersrt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember2018-12-310000225648srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMemberus-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember2018-12-310000225648srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember2018-12-310000225648us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2019-01-012019-12-310000225648us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetGainLossIncludingPortionAttributableToNoncontrollingInterestMember2019-01-012019-12-310000225648us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember2019-01-012019-12-310000225648us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2019-12-310000225648us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetGainLossIncludingPortionAttributableToNoncontrollingInterestMember2019-12-310000225648us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember2019-12-310000225648us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2020-01-012020-12-310000225648us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetGainLossIncludingPortionAttributableToNoncontrollingInterestMember2020-01-012020-12-310000225648us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember2020-01-012020-12-310000225648us-gaap:AccumulatedForeignCurrencyAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2020-12-310000225648us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetGainLossIncludingPortionAttributableToNoncontrollingInterestMember2020-12-310000225648us-gaap:AccumulatedNetGainLossFromCashFlowHedgesIncludingPortionAttributableToNoncontrollingInterestMember2020-12-310000225648cva:ZhaoCountyInvestmentMember2019-12-310000225648us-gaap:OtherAssetsMembercva:ZhaoCountyInvestmentMember2020-12-310000225648us-gaap:OtherAssetsMembercva:ZhaoCountyInvestmentMember2019-12-310000225648cva:ZhaoCountyInvestmentMember2020-12-31iso4217:CNY0000225648cva:ZhaoCountyInvestmentMembersrt:ScenarioForecastMember2021-12-310000225648cva:ZhaoCountyInvestmentMember2020-01-012020-01-310000225648cva:CovantaEnergyAsiaPacificHoldingsLtdMembercva:ZhaoCountyInvestmentMember2020-12-310000225648cva:ProtosEnergyRecoveryFacilityMember2020-12-31utr:MWh0000225648cva:JointVenturewithGreenInvestmentGroupLimitedMembercva:ProtosEnergyRecoveryFacilityMember2020-12-310000225648cva:BiffaplcMembercva:ProtosEnergyRecoveryFacilityMember2020-12-31iso4217:GBP0000225648cva:GreenInvestmentGroupLimitedMembercva:ProtosEnergyRecoveryFacilityMember2020-12-310000225648cva:GreenInvestmentGroupLimitedMembercva:CovantaGreenProtosHoldingMember2020-12-310000225648cva:ProtosEnergyRecoveryFacilityMember2020-01-012020-12-310000225648us-gaap:OtherAssetsMembercva:ProtosEnergyRecoveryFacilityMember2020-12-310000225648cva:NewhurstEnergyRecoveryFacilityMember2020-02-290000225648cva:NewhurstEnergyRecoveryFacilityMembercva:JointVenturewithGreenInvestmentGroupLimitedMember2020-02-290000225648cva:NewhurstEnergyRecoveryFacilityMembercva:BiffaplcMember2020-02-290000225648cva:NewhurstEnergyRecoveryFacilityMembercva:GreenInvestmentGroupLimitedMember2020-02-290000225648cva:CovantaGreenMembercva:GreenInvestmentGroupLimitedMember2020-02-290000225648cva:NewhurstEnergyRecoveryFacilityMember2020-01-012020-12-310000225648cva:CovantaGreenMembercva:GreenInvestmentGroupLimitedMember2020-12-310000225648cva:NewhurstEnergyRecoveryFacilityMemberus-gaap:OtherAssetsMember2020-12-310000225648cva:NewhurstEnergyRecoveryFacilityMembercva:GreenInvestmentGroupLimitedMember2020-12-310000225648cva:RookerySouthEnergyRecoveryFacilityMember2020-12-310000225648cva:RookerySouthEnergyRecoveryFacilityMembercva:GreenInvestmentGroupLimitedMember2020-12-310000225648cva:VeoliaESLimitedMembercva:RookerySouthEnergyRecoveryFacilityMember2020-12-310000225648cva:RookerySouthEnergyRecoveryFacilityMember2020-01-012020-12-310000225648cva:RookerySouthEnergyRecoveryFacilityMembersrt:AffiliatedEntityMember2020-12-310000225648cva:RookerySouthEnergyRecoveryFacilityMembersrt:AffiliatedEntityMember2019-12-310000225648us-gaap:OtherAssetsMembercva:CovantaGreenMember2020-12-310000225648us-gaap:OtherAssetsMembercva:CovantaGreenMember2019-12-310000225648cva:EarlsGateMember2018-12-310000225648cva:JointVenturewithGreenInvestmentGroupLimitedMembercva:EarlsGateMember2019-12-310000225648cva:CovantaJerseyAssetsLtd.Membercva:EarlsGateMember2019-12-310000225648cva:EarlsGateMember2020-12-310000225648cva:EarlsGateMember2019-12-310000225648cva:DublinEfWFacilityMember2018-12-310000225648cva:DublinEfWFacilityMember2018-02-122018-02-120000225648cva:CovantaEuropeAssetsLtdMembercva:GreenInvestmentGroupLimitedMember2018-02-120000225648cva:DublinEfWFacilityMembercva:GreenInvestmentGroupLimitedMembercurrency:EUR2018-02-122018-02-120000225648cva:DublinEfWFacilityMembercva:GreenInvestmentGroupLimitedMember2018-02-122018-02-120000225648cva:CovantaEuropeAssetsLtdMember2018-02-120000225648cva:DublinEfWFacilityMember2019-01-012019-12-310000225648cva:CovantaEuropeAssetsLtdMembercva:GreenInvestmentGroupLimitedMember2020-12-310000225648cva:CovantaEuropeAssetsLtdMember2020-12-310000225648cva:CovantaEuropeAssetsLtdMember2019-12-310000225648cva:PalmBeachResourceRecoveryCorporationMember2018-09-012018-09-300000225648us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembercva:PittsfieldAndSpringfieldEfWMember2020-01-012020-12-310000225648cva:HydroFacilityInvestmentMember2018-07-012018-07-310000225648cva:HydroFacilityInvestmentMember2019-01-012019-12-310000225648us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembercva:SanfengEnvironmentalMember2018-02-092018-02-090000225648us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembercva:SanfengEnvironmentalMember2019-01-012019-12-3100002256482021-01-012020-12-3100002256482022-01-012020-12-3100002256482019-05-300000225648us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-12-310000225648us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-12-310000225648us-gaap:RestrictedStockUnitsRSUMember2018-01-012018-12-310000225648us-gaap:RestrictedStockUnitsRSUMember2020-12-310000225648us-gaap:PerformanceSharesMember2020-01-012020-12-310000225648us-gaap:PerformanceSharesMember2019-01-012019-12-310000225648us-gaap:PerformanceSharesMember2018-01-012018-12-310000225648us-gaap:PerformanceSharesMember2020-12-310000225648us-gaap:RestrictedStockMember2020-01-012020-12-310000225648us-gaap:RestrictedStockMember2019-01-012019-12-310000225648us-gaap:RestrictedStockMember2018-01-012018-12-310000225648us-gaap:RestrictedStockMember2020-12-310000225648us-gaap:EmployeeStockOptionMember2020-01-012020-12-310000225648us-gaap:EmployeeStockOptionMember2019-01-012019-12-310000225648us-gaap:EmployeeStockOptionMember2018-01-012018-12-310000225648us-gaap:EmployeeStockOptionMember2020-12-310000225648us-gaap:RestrictedStockUnitsRSUMember2019-12-310000225648srt:MinimumMemberus-gaap:PerformanceSharesMember2020-12-310000225648us-gaap:PerformanceSharesMembersrt:MaximumMember2020-12-310000225648us-gaap:PerformanceSharesMember2019-12-310000225648us-gaap:PerformanceSharesMember2018-12-310000225648us-gaap:RestrictedStockMember2019-12-310000225648us-gaap:StockOptionMembersrt:DirectorMember2020-01-012020-12-310000225648us-gaap:StockOptionMembersrt:MaximumMember2020-01-012020-12-310000225648cva:EmployeeMemberus-gaap:StockOptionMember2020-01-012020-12-310000225648us-gaap:StockOptionMembercva:StockOptionsFiscal2004PlanMember2019-12-310000225648us-gaap:StockOptionMembercva:StockOptionsFiscal2004PlanMember2020-01-012020-12-310000225648us-gaap:StockOptionMembercva:StockOptionsFiscal2004PlanMember2020-12-310000225648us-gaap:OtherOperatingIncomeExpenseMembercva:PropertyCostsnetofimpairmentMember2020-01-012020-12-310000225648us-gaap:OtherOperatingIncomeExpenseMembercva:PropertyCostsnetofimpairmentMember2019-01-012019-12-310000225648us-gaap:OtherOperatingIncomeExpenseMembercva:PropertyCostsnetofimpairmentMember2018-01-012018-12-310000225648us-gaap:OtherOperatingIncomeExpenseMembercva:BusinessinterruptionandcleanupcostsnetMember2020-01-012020-12-310000225648us-gaap:OtherOperatingIncomeExpenseMembercva:BusinessinterruptionandcleanupcostsnetMember2019-01-012019-12-310000225648us-gaap:OtherOperatingIncomeExpenseMembercva:BusinessinterruptionandcleanupcostsnetMember2018-01-012018-12-310000225648cva:CESMember2019-12-310000225648us-gaap:MeasurementInputDiscountRateMember2020-12-310000225648cva:LongTermTerminalGrowthRateMember2020-12-310000225648country:US2020-01-012020-12-310000225648us-gaap:NonUsMember2020-01-012020-12-310000225648country:US2019-01-012019-12-310000225648us-gaap:NonUsMember2019-01-012019-12-310000225648country:US2018-01-012018-12-310000225648us-gaap:NonUsMember2018-01-012018-12-310000225648country:US2020-12-310000225648us-gaap:NonUsMember2020-12-310000225648country:US2019-12-310000225648us-gaap:NonUsMember2019-12-310000225648country:US2018-12-310000225648us-gaap:NonUsMember2018-12-310000225648us-gaap:StateAndLocalJurisdictionMember2020-12-310000225648us-gaap:ForeignCountryMember2020-12-310000225648us-gaap:InternalRevenueServiceIRSMembercva:ProductionTypeMember2020-12-310000225648us-gaap:InternalRevenueServiceIRSMemberus-gaap:ResearchMember2020-12-310000225648cva:TransactioncostsMember2020-01-012020-12-310000225648us-gaap:GuaranteesMember2020-01-012020-12-310000225648cva:WasteServiceAndEnergyContractsIntangibleAssetsMember2020-01-012020-12-310000225648cva:WasteServiceAndEnergyContractsIntangibleAssetsMember2020-12-310000225648cva:WasteServiceAndEnergyContractsIntangibleAssetsMember2019-12-310000225648us-gaap:OtherIntangibleAssetsMember2020-01-012020-12-310000225648us-gaap:OtherIntangibleAssetsMember2020-12-310000225648us-gaap:OtherIntangibleAssetsMember2019-12-310000225648cva:WasteAndServiceContractsIntangibleLiabilitiesMember2020-01-012020-12-310000225648cva:WasteAndServiceContractsIntangibleLiabilitiesMember2020-12-310000225648cva:WasteAndServiceContractsIntangibleLiabilitiesMember2019-12-310000225648cva:WasteAndServiceContractsIntangibleLiabilitiesMember2019-01-012019-12-310000225648cva:WasteAndServiceContractsIntangibleLiabilitiesMember2018-01-012018-12-310000225648cva:DublinEfWFacilityMember2020-12-310000225648cva:DublinEfWFacilityMember2019-12-310000225648cva:Ambiente2000S.r.lMember2020-12-310000225648cva:Ambiente2000S.r.lMember2019-12-310000225648cva:EarlsGateMember2020-12-310000225648cva:EarlsGateMember2019-12-310000225648cva:RookerySouthEnergyRecoveryFacilityMember2019-12-310000225648cva:NewhurstEnergyRecoveryFacilityMember2020-12-310000225648cva:NewhurstEnergyRecoveryFacilityMember2019-12-310000225648cva:ProtosEnergyRecoveryFacilityMember2019-12-310000225648cva:ECEGHoldingsLtd.Member2020-12-310000225648us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2020-01-012020-12-310000225648us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2019-01-012019-12-310000225648us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2018-01-012018-12-310000225648us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2020-12-310000225648us-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2019-12-310000225648us-gaap:EquityMethodInvestmentsMembercva:DublinEfWFacilityMember2020-01-012020-12-310000225648us-gaap:EquityMethodInvestmentsMembercva:DublinEfWFacilityMember2019-01-012019-12-310000225648us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMembercva:MutualAndBondFundsMember2020-12-310000225648us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMembercva:MutualAndBondFundsMember2019-12-310000225648us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMembercva:EnergyHedgesMember2020-12-310000225648cva:EnergyHedgesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMembercva:EnergyHedgesMember2019-12-310000225648us-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310000225648us-gaap:EstimateOfFairValueFairValueDisclosureMember2019-12-310000225648us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2020-12-310000225648us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2019-12-310000225648us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310000225648us-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310000225648cva:FiscalYear2020Member2020-12-310000225648cva:FiscalYear2021MemberMember2020-12-310000225648cva:EnergyHedgesMember2020-01-012020-12-310000225648cva:EnergyHedgesMember2019-01-012019-12-310000225648cva:EnergyHedgesMember2018-01-012018-12-310000225648us-gaap:InterestRateSwapMember2020-12-310000225648us-gaap:RevolvingCreditFacilityMember2020-01-012020-12-310000225648us-gaap:RevolvingCreditFacilityMember2020-12-310000225648us-gaap:RevolvingCreditFacilityMember2019-12-310000225648cva:TermLoanDue2023Member2020-01-012020-12-310000225648cva:TermLoanMember2020-12-310000225648cva:TermLoanMember2019-12-310000225648us-gaap:SeniorNotesMember2020-12-310000225648us-gaap:SeniorNotesMember2019-12-310000225648cva:TaxExemptBondsDue2024To2042Member2020-12-310000225648cva:TaxExemptBondsDue2024To2042Member2019-12-310000225648cva:TaxExemptBondMember2020-12-310000225648cva:TaxExemptBondMember2019-12-310000225648cva:EquipmentFinancingMember2020-12-310000225648cva:EquipmentFinancingMember2019-12-310000225648us-gaap:LongTermDebtMember2020-12-310000225648us-gaap:LongTermDebtMember2019-12-310000225648cva:ChinaVentureLoanMember2020-12-310000225648cva:ChinaVentureLoanMember2019-12-310000225648cva:AmericasProjectDebtRelatedToServiceFeeStructuresMember2020-12-310000225648cva:AmericasProjectDebtRelatedToServiceFeeStructuresMember2019-12-310000225648cva:ProjectDebtTypeMember2020-12-310000225648cva:ProjectDebtTypeMember2019-12-310000225648cva:CreditFacilitiesMember2020-12-310000225648us-gaap:RevolvingCreditFacilityMember2020-12-310000225648cva:TermLoanMember2020-12-310000225648cva:CreditFacilitiesMember2020-01-012020-12-310000225648cva:IncrementalCreditFacilityMember2020-12-310000225648us-gaap:LetterOfCreditMemberus-gaap:RevolvingCreditFacilityMember2020-12-310000225648cva:FiscalYear2020to2022Member2020-01-012020-12-310000225648cva:FiscalYear2023Member2020-01-012020-12-310000225648cva:FederalFundsRateMember2020-01-012020-12-310000225648cva:OneMonthLIBORMember2020-01-012020-12-310000225648us-gaap:RevolvingCreditFacilityMembersrt:MinimumMembercva:BaseRateLoansMemberus-gaap:BaseRateMember2020-01-012020-12-310000225648us-gaap:RevolvingCreditFacilityMembercva:BaseRateLoansMembersrt:MaximumMemberus-gaap:BaseRateMember2020-01-012020-12-310000225648us-gaap:RevolvingCreditFacilityMembersrt:MinimumMembercva:EuroDollarRateMembercva:LIBORMember2020-01-012020-12-310000225648us-gaap:RevolvingCreditFacilityMembercva:EuroDollarRateMembersrt:MaximumMembercva:LIBORMember2020-01-012020-12-310000225648us-gaap:LetterOfCreditMember2020-12-310000225648us-gaap:RevolvingCreditFacilityMembersrt:MinimumMember2020-01-012020-12-310000225648us-gaap:RevolvingCreditFacilityMembersrt:MaximumMember2020-01-012020-12-310000225648cva:TermLoanMembersrt:MinimumMemberus-gaap:BaseRateMember2020-01-012020-12-310000225648cva:TermLoanMembercva:BaseRateLoansMembersrt:MaximumMemberus-gaap:BaseRateMember2020-01-012020-12-310000225648cva:TermLoanMembersrt:MaximumMembercva:LIBORMember2020-01-012020-12-310000225648cva:TermLoanMembercva:LIBORMember2020-12-310000225648cva:ForeignSubsidiariesMember2020-12-310000225648us-gaap:SeniorNotesMember2020-01-012020-12-310000225648cva:SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2020-12-310000225648cva:SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2019-12-310000225648cva:SeniorNotes6.00PercentDue2027Memberus-gaap:SeniorNotesMember2020-12-310000225648cva:SeniorNotes6.00PercentDue2027Memberus-gaap:SeniorNotesMember2019-12-310000225648cva:SeniorNotes5.875PercentDue2025Memberus-gaap:SeniorNotesMember2020-12-310000225648cva:SeniorNotes5.875PercentDue2025Memberus-gaap:SeniorNotesMember2019-12-310000225648cva:SeniorNotes5.875PercentDue2024Memberus-gaap:SeniorNotesMember2020-12-310000225648cva:SeniorNotes5.875PercentDue2024Memberus-gaap:SeniorNotesMember2019-12-310000225648cva:SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2020-08-310000225648us-gaap:SeniorNotesMembercva:SeniorNotesDue2024Member2020-08-310000225648us-gaap:SeniorNotesMembercva:SeniorNotesDue2024Member2020-01-012020-12-310000225648cva:SeniorNotes6.00PercentDue2027Memberus-gaap:SeniorNotesMember2018-10-260000225648cva:SeniorNotes6.00PercentDue2027Memberus-gaap:SeniorNotesMember2017-03-012017-03-010000225648cva:SeniorNotes6.00PercentDue2027Memberus-gaap:SeniorNotesMember2020-01-012020-12-310000225648cva:SeniorNotes5.875PercentDue2025Memberus-gaap:SeniorNotesMember2017-03-010000225648cva:SeniorNotes5.875PercentDue2025Memberus-gaap:SeniorNotesMember2017-03-012017-03-010000225648cva:SeniorNotes5.875PercentDue2024Memberus-gaap:SeniorNotesMember2014-03-010000225648cva:NewHampshireSeries2020AMembercva:TaxExemptBondsMember2020-12-310000225648cva:NewHampshireSeries2020AMembercva:TaxExemptBondsMember2019-12-310000225648cva:NewHampshireSeries2020BMembercva:TaxExemptBondsMember2020-12-310000225648cva:NewHampshireSeries2020BMembercva:TaxExemptBondsMember2019-12-310000225648cva:TaxExemptBondsMembercva:PennsylvaniaTaxExemptBondsMember2020-12-310000225648cva:TaxExemptBondsMembercva:PennsylvaniaTaxExemptBondsMember2019-12-310000225648cva:NewHampshireSeries2018ABondsMembercva:TaxExemptBondsMember2020-12-310000225648cva:NewHampshireSeries2018ABondsMembercva:TaxExemptBondsMember2019-12-310000225648cva:NewHampshireSeries2018BBondsMembercva:TaxExemptBondsMember2020-12-310000225648cva:NewHampshireSeries2018BBondsMembercva:TaxExemptBondsMember2019-12-310000225648cva:TaxExemptBondsMembercva:NewHampshireSeries2018CBondsMember2020-12-310000225648cva:TaxExemptBondsMembercva:NewHampshireSeries2018CBondsMember2019-12-310000225648cva:TaxExemptBondsMembercva:NewYorkSeries2018AMember2020-12-310000225648cva:TaxExemptBondsMembercva:NewYorkSeries2018AMember2019-12-310000225648cva:TaxExemptBondsMembercva:NewYorkSeries2018BMember2020-12-310000225648cva:TaxExemptBondsMembercva:NewYorkSeries2018BMember2019-12-310000225648cva:TaxExemptBondsMembercva:Series2018VirginiaBondsMember2020-12-310000225648cva:TaxExemptBondsMembercva:Series2018VirginiaBondsMember2019-12-310000225648cva:NewJerseySeries2015AMembercva:TaxExemptBondsMember2020-12-310000225648cva:NewJerseySeries2015AMembercva:TaxExemptBondsMember2019-12-310000225648cva:TaxExemptBondsMembercva:PennsylvaniaSeries2015AMember2020-12-310000225648cva:TaxExemptBondsMembercva:PennsylvaniaSeries2015AMember2019-12-310000225648cva:TaxExemptBondsMember2020-12-310000225648cva:TaxExemptBondsMember2019-12-310000225648cva:NewHampshireSeries2020AMembercva:TaxExemptBondsMember2020-08-310000225648cva:NewHampshireSeries2020BMembercva:TaxExemptBondsMember2020-08-310000225648cva:TaxExemptBondsMember2020-08-310000225648cva:TaxExemptBondsMember2020-01-012020-12-310000225648cva:TaxExemptBondsMembercva:NewHampshire2018SeriesTotalMember2020-12-310000225648cva:TaxExemptBondsMembercva:NewYork2018SeriesTotalMember2020-12-310000225648cva:ProjectDebtTypeMember2017-06-300000225648cva:EquipmentFinancingMember2019-01-012019-12-310000225648srt:MinimumMember2019-12-310000225648cva:EquipmentFinancingMembersrt:MaximumMember2019-12-310000225648cva:AmericasProjectDebtRelatedToServiceFeeStructuresMembersrt:MinimumMember2020-12-310000225648cva:AmericasProjectDebtRelatedToServiceFeeStructuresMembersrt:MaximumMember2020-12-310000225648srt:MinimumMembercva:AmericasProjectDebtRelatedToTipFeeStructuresMember2020-12-310000225648srt:MaximumMembercva:AmericasProjectDebtRelatedToTipFeeStructuresMember2020-12-310000225648cva:ProjectDebtCurrentMember2020-12-310000225648cva:ProjectDebtCurrentMember2019-12-310000225648cva:ProjectDebtNoncurrentMember2020-12-310000225648cva:ProjectDebtNoncurrentMember2019-12-310000225648cva:LongTermDebtCurrentMaturitiesMember2020-12-310000225648cva:LongTermDebtCurrentMaturitiesMember2019-12-310000225648cva:LongTermDebtExcludingCurrentMaturitiesMember2020-12-310000225648cva:LongTermDebtExcludingCurrentMaturitiesMember2019-12-3100002256482018-02-012018-02-280000225648us-gaap:LetterOfCreditMember2020-12-310000225648cva:SuretyBondsMember2020-12-310000225648us-gaap:AllowanceForNotesReceivableMember2019-12-310000225648us-gaap:AllowanceForNotesReceivableMember2020-01-012020-12-310000225648us-gaap:AllowanceForNotesReceivableMember2020-12-310000225648us-gaap:AllowanceForNotesReceivableMember2018-12-310000225648us-gaap:AllowanceForNotesReceivableMember2019-01-012019-12-310000225648us-gaap:AllowanceForNotesReceivableMember2017-12-310000225648us-gaap:AllowanceForNotesReceivableMember2018-01-012018-12-310000225648us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2019-12-310000225648us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2020-01-012020-12-310000225648us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2020-12-310000225648us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2018-12-310000225648us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2019-01-012019-12-310000225648us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2017-12-310000225648us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2018-01-012018-12-31
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                    
Commission file number 1-06732
COVANTA HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-6021257
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification Number)
445 South StreetMorristownNJ07960
(Address of Principal Executive Office) (Zip Code)
Registrant’s telephone number, including area code: (862345-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stockCVANew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  þ  No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ¨  No  þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ  No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  þ  No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated FilerAccelerated
filer
Non-accelerated
filer
Smaller reporting 
company
Emerging growth
company
þoo
(Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  Yes  þ  No  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes    No  þ
As of June 30, 2020, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $1.1 billion. The aggregate market value was computed by using the closing price of the common stock as of that date on the New York Stock Exchange. (For purposes of calculating this amount only, all directors and executive officers of the registrant have been treated as affiliates.)
Class  Outstanding at February 12, 2021
Common Stock, $0.10 par value  131,981,775
Documents Incorporated By Reference:
Part of Form 10-K of Covanta Holding Corporation Documents Incorporated by Reference
Part III Portions of the Proxy Statement to be filed with the Securities and Exchange Commission in connection with the 2021 Annual Meeting of Stockholders.


Table of Contents
TABLE OF CONTENTS
Page
 
2

Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K 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 (“SEC”), 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 Holding Corporation and its subsidiaries (“Covanta”) 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,” 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 us are not guarantees or indicative of future performance. Important factors, risks and uncertainties that could cause actual results to differ materially from those forward-looking statements include, but are not limited to:

the impact of the COVID-19 pandemic on our employees, business, and operations, or on the economy in general, including commercial and financial markets;
our ability to identify opportunities and execute on strategies and transactions, including in connection with a strategic review of our business and including acquisitions, divestitures, and restructuring opportunities;
seasonal or long-term fluctuations in the prices of energy, waste disposal, scrap metal and commodities;
our ability to renew or replace expiring contracts at comparable prices and with other acceptable terms;
adoption of new laws and regulations in the United States and abroad, including energy laws, environmental laws, tax laws, labor laws and healthcare laws;
failure to maintain historical performance levels at our facilities and our ability to retain the rights to operate facilities we do not own;
our ability to avoid adverse publicity or reputational damage relating to our business;
advances in technology;
difficulties in the operation of our facilities, including fuel supply and energy delivery interruptions, failure to obtain regulatory approvals, equipment failures, labor disputes and work stoppages, and weather interference and catastrophic events;
difficulties in the financing, development and construction of new projects and expansions, including increased construction costs and delays;
our ability to realize the benefits of long-term business development and bear the cost of business development over time;
limits of insurance coverage;
our ability to avoid defaults under our long-term contracts;
performance of third parties under our contracts and such third parties' observance of laws and regulations;
concentration of suppliers and customers;
geographic concentration of facilities;
increased competitiveness in the energy and waste industries;
changes in foreign currency exchange rates;
limitations imposed by our existing indebtedness, including limitations on strategic alternatives or transactions;
our ability to perform our financial obligations and guarantees and to refinance our existing indebtedness;
exposure to counterparty credit risk and instability of financial institutions in connection with financing transactions;
the scalability of our business;
our ability to attract and retain talented people;
failures of disclosure controls and procedures and internal controls over financial reporting;
our ability to utilize net operating loss carryforwards;
general economic conditions in the United States and abroad, including the availability of credit and debt financing; and
other risks and uncertainties affecting our business described in Item 1A. Risk Factors of this Annual Report on Form 10-K and in other filings by Covanta with the SEC.

Although we believe that our 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 of our forward-looking statements. Our 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 Annual Report on Form 10-K are made only as of the date hereof and we do 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.
3

Table of Contents
AVAILABILITY OF INFORMATION

Information about Covanta is available on the Company’s website at www.covanta.com. On this website, Covanta makes available, free of charge, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports. All such reports are available as soon as reasonably practicable after they are electronically filed with, or electronically furnished to, the SEC. Printed copies of these documents may be requested, free of charge, by contacting the Corporate Secretary, Covanta, 445 South Street, Morristown, NJ 07966, telephone 973-345-5000. The information contained on Covanta's website is not part of this Annual Report on Form 10-K and is not incorporated by reference in this document. References to website addresses are provided as inactive textual references only. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding the Company that have been filed electronically with the SEC, including this Form 10-K.





4

Table of Contents
PART I
Item 1. BUSINESS

The terms “we,” “our,” “ours,” “us,” “Covanta” and “Company” refer to Covanta Holding Corporation and its subsidiaries and the term “Covanta Energy” refers to our subsidiary Covanta Energy, LLC and its subsidiaries.

About Covanta Holding Corporation

We are organized as a holding company, which was incorporated in Delaware on April 16, 1992. We conduct all of our operations through subsidiaries, which are engaged predominantly in the business of waste and energy services.

Our mission is to provide sustainable waste and energy solutions. We seek to do this through a variety of service offerings, including our core business of owning and operating infrastructure for the conversion of Waste-to-Energy (“WtE”).

WtE facilities produce energy through the combustion of non-hazardous municipal solid waste (“MSW”) in specially-designed power plants. Most of our facilities are “mass-burn” facilities, which combust the MSW on an as-received basis without any pre-processing such as shredding, sorting or sizing. The process reduces the waste to an inert ash while extracting ferrous and non-ferrous metals for recycling. In addition to our mass-burn facilities, we own and/or operate additional facilities that use other processes or technologies, such as refuse-derived fuel facilities which process waste prior to combustion.

WtE serves two key markets as both a sustainable waste management solution that is environmentally superior to landfilling and as a source of clean energy that reduces overall greenhouse gas (“GHG”) emissions. WtE is considered renewable under the laws of many states and under federal law. Our facilities are critical infrastructure assets that allow our customers, which are principally municipal entities, to provide an essential public service through sustainable practices.

Our WtE facilities earn revenue from the disposal of waste, generally under long-term contracts, the generation of electricity, and from the sale of metals recovered during the WtE process. We operate and/or have ownership positions in 41 WtE facilities currently in commercial operation, 39 of which are in North America. In total, these facilities process approximately 21 million tons of solid waste annually, equivalent to 8% of the post-recycled MSW generated in the United States ("U.S."). Our facilities produce approximately 10 million megawatt hours (“MWh”) of baseload electricity annually. We also operate waste management infrastructure, including 13 waste transfer stations, 20 material processing facilities, four landfills (primarily for ash disposal), one metals processing facility, and one ash processing facility (currently in start-up and testing phase), all of which are complementary to our core WtE business.

Outside of North America, we operate and/or have equity interests in WtE projects in Ireland, Italy, the United Kingdom ("UK") and China (our projects in the UK and China are currently in development and/or under construction). We continue to evaluate additional opportunities for international WtE projects where the regulatory and market environments are attractive. For additional information, see Recent Business Developments below, and Item 8. Financial Statements and Supplementary Data — Note 3. New Business and Asset Management. Ownership and operation of facilities in foreign countries potentially involves greater political and financial uncertainties than we experience in the U.S., as described below and discussed in Item 1A. Risk Factors.

We have one reportable segment, which comprises our entire operating business. Additional information about our reportable segment and our operations by geographic area is contained in Item 8. Financial Statements And Supplementary Data — Note 1. Organization and Summary of Significant Accounting Policies.

Environmental Benefits of WtE

We believe that WtE offers solutions to public sector leaders around the world for addressing two key issues: sustainable waste management and renewable energy generation. We believe that the environmental benefits of WtE, as an alternative to landfilling, are clear and compelling: by processing municipal solid waste in WtE facilities, we reduce GHG emissions, lower the risk of groundwater contamination, and conserve land. WtE facilities reduce GHG emissions by displacing fossil-fuel fired grid electricity, recycling metals, and diverting MSW from landfills, which are the 3rd largest source of man-made methane, a GHG over 80 times more potent than carbon dioxide (“CO2”) over a 20-year period. At the same time, WtE generates clean, reliable energy from a renewable fuel source, thus reducing dependence on fossil fuels, the combustion of which is itself a major contributor of GHG emissions. The U.S. Environmental Protection Agency (“EPA”), using lifecycle tools such as its own Municipal Solid Waste Decision Support Tool, has found that, on average, approximately one ton of CO2-equivalent is reduced relative to landfilling for every ton of waste processed. We believe that WtE is also an important component of business and
5

Table of Contents
community efforts to divert post-recycled waste from landfills as part of their GHG, zero-waste-to-landfill, circular economy, and other sustainability initiatives. WtE facilities also represent key community infrastructure, providing local, reliable and sustainable waste management and energy services. As public planners and commercial and industrial companies address their needs for more environmentally sustainable waste management and energy generation in the years ahead, we believe that WtE will be an increasingly attractive alternative.

We continuously seek to educate policymakers and regulators about the environmental and economic benefits of WtE and advocate for policies and regulations that appropriately reflect these benefits. Our business is highly regulated, and as such we believe that it is critically important for us, as an industry leader, to play an active role in the debates surrounding potential policy developments that could impact our business.

We believe that our efforts to promote, protect and expand our business will be enhanced by the development of additional technologies in fields such as recycling, alternative waste treatment processes, combustion controls, emission controls and residue recycling, reuse or disposal. We have advanced our research and development efforts in some of these areas relevant to our WtE business, and have patents and patents pending for advances in controlling emissions.

Other Environmental Services Offerings

In addition to our core WtE business, we offer a variety of sustainable waste management solutions in response to customer demand, including on site clean-up services, wastewater treatment, pharmaceutical and healthcare solutions, reverse distribution, transportation and logistics, recycling and depackaging. Together with our processing of non-hazardous "profiled waste" for purposes of assured destruction or sustainability goals in our WtE facilities, we offer these services under our Covanta Environmental Solutions ("CES") brand. Through acquisitions and organic growth initiatives, we have expanded our network of facilities to enable us to provide a range of services to industrial customers for the treatment, recycling and/or disposal of their non-hazardous materials. These businesses are highly synergistic with our existing profiled waste business, offer us the opportunity to expand the geographical sourcing of our waste streams and expand our presence in the environmental services sector, allowing us to drive higher margin profiled waste volumes into our WtE facilities and access additional revenue growth opportunities.

STRATEGY

In October 2020, we announced the launch of a comprehensive strategic review of our assets, operations, growth priorities, and capital structure. This review is an opportunity to explore all options to enhance stockholder value, including assessing plans for each of our business lines and geographies. This review will be broad in scope and will be completed in due course. The board of directors appointed Michael Ranger as President and Chief Executive Officer to lead this review and its subsequent execution.

Sustainability Goals & Projects

We continue to advance our performance against a series of sustainability goals aligned with our business goals and mission. Set in the areas of safety and health, environment, materials management, human resources and community affairs, each goal has an assigned champion on our senior leadership team to ensure their full integration into our business. We believe attaining these goals helps us respond to our customers’ increasing interest in sustainability and the sustainable solutions we provide, mitigate certain risks, and gain a competitive advantage in business development opportunities. We seek to continuously improve our performance across these aspects to remain an industry leader.

Providing sustainable waste, materials, and energy services to our customers is the cornerstone of our business. Our corporate culture is focused on the triple bottom line of sustainability — people, planet, and prosperity — in support of our mission. In addition to robust financial reporting, we are committed to transparently reporting our environmental, social and governance standards, policies, and performance through our corporate sustainability report, which can be found on our Company website.

6

Table of Contents
WASTE-TO-ENERGY PROJECTS

Our WtE projects generate revenue primarily from three sources: (1) fees charged for operating facilities or processing waste received; (2) the sale of electricity and/or steam; and (3) the sale of ferrous and non-ferrous metals that are recovered from the waste stream as part of the WtE process. We may also generate additional revenue from the construction, expansion or upgrade of a facility, when a public sector client owns the facility. Our customers for waste services or facility operations are principally public sector entities, though we also market disposal capacity at certain facilities to commercial customers. Our facilities primarily sell electricity, either to utilities at contracted rates or, in situations where a contract is not in place, at prevailing market rates in regional markets (primarily PJM, NEPOOL and NYISO in the Northeastern U.S.), and in some cases sell steam directly to industrial users.

We also operate and/or have ownership positions in environmental services businesses, transfer stations, and landfills (primarily for ash disposal) that are ancillary and complementary to our WtE projects and generate additional revenue from disposal or service fees.

WtE Contract Structures

Most of our WtE projects were developed and structured contractually as part of competitive procurement processes conducted by public sector entities. As a result, many of these projects have common features. However, each contractual agreement is different, reflecting the specific needs and concerns of a client community, applicable regulatory requirements and/or other factors.

Our WtE projects can generally be divided into three categories, based on the applicable contract structure as described in the table below. Notwithstanding distinctions among these general classifications in contract structures, in all cases we focus on a consistent set of performance indicators to optimize service to customers and operating results, including: (i) boiler availability; (ii) safety and environmental performance measures; (iii) tons processed; (iv) megawatt hours and/or steam sold; and (v) recycled metal tons recovered and sold.

The following summarizes the typical contractual and economic characteristics of the three primary project structures for our WtE projects located in North America:
Tip FeeService Fee
(Covanta Owned)
Service Fee
(Client Owned)
Number of facilities:18318
Client(s):Host community and municipal and commercial waste customersHost community, with limited merchant capacity in some casesDedicated to host community exclusively
Waste or service
revenue:
Per ton “tipping fee”Fixed fee, with performance incentives and inflation escalation
Energy revenue:Covanta retains 100%Share with client
(Covanta retains approximately 20% on average)
Metals revenue:Covanta retains 100%Share with client
(Covanta typically retains approximately 50%)
Operating costs:Covanta responsible for all operating costsPass through certain costs to client
(e.g. ash disposal)
Project debt service:Covanta project subsidiary responsiblePaid by client explicitly as part of service feeClient responsible for debt service
After service contract
expiration:
N/ACovanta owns the facility; clients have certain rights set forth in contracts; facility converts to Tip Fee or remains Service Fee with new termsClient owns the facility; extend with Covanta or tender for new contract
We are principally responsible for capital costs in facilities that we own; however, client communities may have a contractual obligation to fund a portion of certain capital costs, particularly if required by a change in law. We also may be required to participate in capital improvements for non-owned facilities that we operate, which would be accounted for as operating expense. In contracts with our client communities, we typically agree to operate the facility and meet minimum performance standards. These may include waste processing, energy efficiency, energy production and environmental standards. Unexcused failure to meet these requirements or satisfy the other material terms of our agreement, may result in damages charged to us or, if the breach is substantial, continuing and unremedied, termination of the applicable agreement. If one or more contracts were terminated for our default, these contractual damages may be material to our cash flow and financial condition. To date, we have not incurred material liabilities under such performance guarantees.
7

Table of Contents
Contracted and Merchant Revenue

We generated 77% of our waste and service revenue in 2020 under contracts at set rates, while 23% was generated at prevailing market prices. Our waste disposal / service contracts expire at various times between 2021 and 2053. As of December 31, 2020, the volume weighted average contract life of our service fee contracts and tip fee contracts was 8 and 6 years, respectively. Our energy contracts expire at various times between 2021 and 2039. As our contracts expire, and to the extent they are not extended or replaced on similar terns, we become subject to greater market risk in maintaining and enhancing our revenue. To date, we have been successful in extending the majority of our existing contracts to operate WtE facilities owned by public sector clients.

As our waste service agreements at facilities that we control expire, we intend to seek replacement or additional contracts, and because project debt on these facilities will be paid off at such time, we expect to be able to offer rates that will attract sufficient quantities of waste while providing acceptable revenue to us. The expiration of existing energy contracts at these facilities will require us to sell our output either into the local electricity grid at prevailing rates or pursuant to new contracts. We expect that multi-year contracts for waste supply at these facilities will continue to be available on acceptable terms in the marketplace, at least for a substantial portion of facility capacity, as municipalities continue to value long-term committed and sustainable waste disposal capacity. We also expect that an increasing portion of system capacity will be contracted on a shorter-term basis, and so we will have more frequent exposure to waste market risk. We expect that multi-year contracts for energy sales will generally be less available than in the past, thereby increasing our exposure to energy market prices upon expiration. As our existing contracts have expired and our exposure to market energy prices has increased, we entered into hedging arrangements in order to mitigate our exposure to near-term (one to three years) revenue fluctuations in energy markets, and we expect to continue to do so in the future. Our efforts in this regard will involve only mitigation of price volatility for the energy we produce in order to limit our energy revenue "at risk," and will not involve speculative energy trading.

See Item 1A. Risk Factors — Our results of operations may be adversely affected by market conditions existing at the time our contracts expire. Over time, we expect to seek to renew, extend or sign new waste and service contracts and pursue opportunities with commercial customers and municipalities that are not necessarily stakeholders in our facilities in order to maintain a significant majority of our waste and service revenue (and WtE fuel supply) under multi-year contracts. Our strategies in regard to such opportunities will be reviewed as part of our ongoing strategic review.

8

Table of Contents
Summary information regarding our waste-to-energy operations located in North America is provided in the following table:
 Design Capacity 
LocationWaste
Processing
(TPD)
Gross
Electric
(MW)
Nature of InterestService Contract Expiration
TIP FEE STRUCTURES
Fairfax County (1)
Virginia3,000 93.0 Owner/Operator
Southeast Massachusetts (1) (2)
Massachusetts2,700 78.0 Owner/Operator
Delaware Valley (1)
Pennsylvania2,688 87.0 Owner/Operator
Hempstead New York2,505 72.0 Owner/Operator
Indianapolis (3)
Indiana2,362 6.5 Owner/Operator
Niagara (3)
New York2,250 50.0 Owner/Operator
Essex County (1)
New Jersey2,277 66.0 Owner/Operator
Haverhill (1)
Massachusetts1,650 44.6 Owner/Operator
Union County (1)
New Jersey1,440 42.1 Lessee/Operator
Plymouth (1)
Pennsylvania1,216 32.0 Owner/Operator
Tulsa (1) (3)
Oklahoma1,125 16.8 Owner/Operator
Camden (1)
New Jersey1,050 21.0 Owner/Operator
Alexandria/Arlington (1)
Virginia975 22.0 Owner/Operator
Stanislaus County (1)
California800 22.4 Owner/Operator
Southeast Connecticut (1)
Connecticut689 17.0 Owner/Operator
Bristol (1)
Connecticut650 16.3 Owner/Operator
Lake CountyFlorida528 14.5 Owner/Operator
Babylon (4)
New York750 16.8 Owner/Operator
SERVICE FEE (COVANTA OWNED) STRUCTURES
Onondaga CountyNew York990 39.2 Owner/Operator2035
HuntingtonNew York750 24.3 Owner/Operator2024
Marion CountyOregon550 13.1 Owner/Operator2021
SERVICE FEE (CLIENT OWNED) STRUCTURES
Pinellas CountyFlorida3,150 75.0 Operator2024
Miami-Dade County (1) (2)
Florida3,000 77.0 Operator2023
Honolulu (2) (5)
Hawaii2,950 90.0 Operator2032
Lee County (5)
Florida1,836 57.3 Operator2024
Montgomery County (1) (5)
Maryland1,800 63.4 Operator2026
Hillsborough CountyFlorida1,800 46.5 Operator2029
Long BeachCalifornia1,380 36.0 Operator2024
York County (1)
Pennsylvania1,344 42.0 Operator2035
Palm Beach IFlorida2,178 62.0 Operator2029
Palm Beach IIFlorida2,740 95.0 Operator2035
Lancaster County (1) (3)
Pennsylvania1,200 33.1 Operator2032
Pasco CountyFlorida1,050 29.7 Operator2024
Harrisburg (1)
Pennsylvania800 20.8 Operator2032
BurnabyBritish Columbia, Canada800 23.9 Operator2025
Huntsville (3)
Alabama690 — Operator2023
Kent CountyMichigan625 16.8 Operator2023
MacArthurNew York486 12.0 Operator2030
Durham-York
Durham Region, Canada
480 17.4 
Operator
2036
SUBTOTAL59,254 1,592.5 
(1)These facilities either sell electricity into the regional power pool at prevailing market rates or have contractual arrangements to sell electricity at prevailing market rates
(2)These facilities use a refuse-derived fuel technology.
(3)These facilities have been designed to export steam for sale. See table below for the equivalent electric output. The equivalent electric output is part of, not in addition to, the design capacity megawatts ("MW") listed in the table above.
9

Table of Contents
FacilityEquivalent Electric Output (MW)
Niagara66
Indianapolis52
Tulsa25
Huntsville15
Lancaster 5
(4)This facility transitioned from a service fee (owned) to a tip fee contract on April 1, 2019.
(5)The client has a termination option under the service agreement.

Summary information regarding our equity investments in WtE projects outside of North America is provided in the following table:
 Design Capacity 
ProjectLocationWaste
Processing
(Metric TPD)
Gross
Electric
(MW)
Nature of 
Interest
Dublin (1) (2)
Ireland1,968 68.0 
50% Owner/Operator
TrezzoItaly500 18.0 13% Owner/JV Operator
Earls Gate (1) (3)
UK650 21.5 25% Owner
Rookery (1) (4)
UK1,600 67.1 40% Owner/Operator
Newhurst (1) (5)
UK1,040 42.0 25% Owner/Operator
Protos (1) (6)
UK1,220 45.0 37.5% Owner/Operator
Zhao County WtE (7)
China 1,200 24.0 26% Owner
SUBTOTAL8,178 285.6 
(1)For additional information, see Item 8. Financial Statements and Supplementary Data Note 3. New Business and Asset Management.
(2)We have a 50% indirect ownership of Dublin WtE, through our 50/50 joint venture, Covanta Europe Assets Ltd.
(3)Facility currently under construction with operations expected to commence in 2023. We have a 25% indirect ownership of Earls Gate, through our 50/50 joint venture with Green Investment Group Ltd. ("GIG"), Covanta Green Jersey Assets Ltd., which owns 50% of Earls Gate.
(4)Facility currently under construction with operations expected to commence in the first half of 2022. We have a 40% indirect ownership of Rookery through our 50/50 joint venture with GIG, Covanta Green UK Ltd. (“Covanta Green”).
(5)Facility currently under construction with operations expected to commence in 2023. We have a 25% indirect ownership of Newhurst through our 50/50 joint venture with GIG, Covanta Green.
(6)Facility currently under construction with operations expected to commence in 2024. We have a 37.5% indirect ownership of Protos through our 50/50 joint venture with GIG, Covanta Green Protos Holding Ltd.
(7)Construction on the facility began in early 2020; completion is expected in less than two years. We have a 26% interest in Zhao County through our venture with Longking Energy Development Co. Ltd.

Recent Business Developments

UK Joint Ventures

Under our joint development arrangement with GIG, we have executed on the following:

In December 2020, we reached financial close on the Protos Energy Recovery Facility (“Protos”), a 400,000 metric ton-per-year, 49 megawatt WtE facility under construction in Cheshire, England. Through a 50/50 jointly-owned and governed entity Covanta Green Protos Holding Ltd., we and GIG own a 75% interest in Protos with Biffa plc, a UK
10

Table of Contents
waste services provider, holding the remaining 25% interest. Biffa will provide approximately 60% of the waste supply to the project, and we will provide operations and maintenance services, in each case under a 20-year arrangement. Protos is expected to commence commercial operations in 2024.
In February 2020, we reached financial close on the Newhurst Energy Recovery Facility (“Newhurst”), a 350,000 metric ton-per-year, 42 megawatt WtE facility under construction in Leicestershire, England. Through a 50/50 jointly-owned and governed entity Covanta Green, we and GIG own a 50% interest in Newhurst with Biffa plc, a UK waste services provider, holding the remaining 50% interest. Biffa will provide approximately 70% of the waste supply to the project, and we will provide operations and maintenance services, in each case under a 20-year arrangement. Newhurst is expected to commence commercial operations in 2023.

Other Business Development

In January 2020, in connection with our Zhao County agreement, we received proceeds of RMB 61 million ($9 million) through a loan agreement with a third party. We subsequently contributed the entire amount of the loan proceeds to the equity investment entity which owns the project in the form of a shareholder loan which is convertible to equity.

New Contracts and Contract Extensions

During the third quarter of 2020, we entered into an amended and extended agreement with a neighboring industrial facility at our Niagara plant for a seven-year extension of a steam supply contract.
During the second quarter of 2020, we entered into an amended and extended service agreement with Marion County, OR through 2021.
In January 2021, we signed a new waste disposal agreement with the Town of North Hempstead, NY for approximately 140,000 tons annually at our Hempstead facility. The agreement, which commenced on January 1, 2021, is for an initial five-year term with options to extend for an additional 10 years.

For additional information, see Item 8. Financial Statements and Supplementary Data — Note 3. New Business and Asset Management,

MARKETS, COMPETITION AND BUSINESS CONDITIONS

Waste Services

Post-recycled municipal solid waste generation in the U.S. is approximately 250 million tons per year, of which the WtE industry processes approximately 30 million tons (of which we process approximately three-quarters).

WtE is an important part of the waste management infrastructure of the U.S., particularly in regions with high population density but limited availability of land for landfilling, with 75 facilities currently in operation that collectively process approximately 30 million tons of post-recycled solid waste and serve the needs of over 37 million people and produce enough electricity for the equivalent of 1.3 million homes. The use of WtE is even more prevalent in Western Europe and many countries in Asia, such as China and Japan. Over 1,200 WtE facilities are in use today around the world, with a capacity to process approximately 260 million tons of waste per year. In the waste management hierarchies of the U.S. EPA and the European Union (“EU”), WtE is designated as a superior solution to landfilling.

Renewable Energy

Public policy in the U.S., at both the state and national levels, has developed over the past several years in support of increased generation of renewable energy as a means of combating the potential effects of climate change, as well as increasing domestic energy security. Today in the U.S., approximately 17% of electricity is generated from renewable sources, approximately 38% of which is hydroelectric power.

WtE is designated as renewable energy in 31 states, the District of Columbia, and Puerto Rico, as well as in several federal statutes and policies. Unlike most other renewable resources, WtE generation can serve base-load demand and is more often located near population centers where demand is greatest, minimizing the need for expensive incremental transmission infrastructure.

11

Table of Contents
General Business Conditions

Economic - Changes in the economy affect the demand for goods and services generally, which affects overall volumes of waste requiring management and the pricing at which we can attract waste to fill available capacity. We receive the majority of our revenue under short- and long-term contracts, which limits our exposure to price volatility, but with adjustments intended to reflect changes in our costs. Where our revenue is received under other arrangements and depending upon the revenue source, we have varying amounts of exposure to price volatility.

The largest component of our revenue is waste revenue, which has generally been subject to less price volatility than our revenue derived from the sale of energy and metals. Waste markets tend to be affected, both with respect to volume and price, by local and regional economic activity, as well as state and local waste management policies.

At the same time, U.S. natural gas market prices influence electricity and steam pricing in regions where we operate, and thus affect our revenue for the portion of the energy we sell that is not under fixed-price contracts. Energy markets tend to be affected by regional supply and demand, as well as national economic activity and regulations.

The following are various published pricing indices relating to the U.S. economic drivers that are relevant to those aspects of our business where we have market exposure; however, there is not a precise correlation between our results and changes in these metrics.
As of December 31,
2020201920182017
Consumer Price Index (1)
1.4 %2.3 %1.9 %2.1 %
PJM Pricing (Electricity) (2)
$18.23 $24.02 $34.75 $28.84 
NE ISO Pricing (Electricity) (3)
$23.29 $31.20 $44.06 $33.27 
Henry Hub Pricing (Natural Gas) (4)
$2.04 $2.57 $3.17 $2.99 
#1 HMS Pricing (Ferrous Metals) (5)
$233 $252 $328 $268 
Scrap Metals - Old Cast Aluminum Scrap (6)
$0.41 $0.42 $0.57 $0.61 
(1)    Represents the year-over-year percent change in the Headline CPI number. The Consumer Price Index (CPI-U) data is provided by the U.S. Department of Labor Bureau of Labor Statistics.
(2)    Average price per MWh for full year. Pricing for the PJM PSEG Zone is provided by the PJM ISO.
(3)    Average price per MWh for full year. Pricing for the Mass Hub Zone is provided by the NE ISO.
(4)    Average price per MMBtu for full year. The Henry Hub Pricing data is provided by the Natural Gas Weekly Update, Energy Information Administration, Washington, DC.
(5)    Average price per gross ton for full year. The #1 Heavy Melt Steel ("HMS") composite index ($/gross ton) price is published by American Metal Market.
(6)    Average price per pound for full year. Calculated using the high price of Old Cast Aluminum Scrap ($/lb.) published by American Metal Market.

Seasonal - Our quarterly operating results within the same fiscal year typically differ substantially due to seasonal factors, primarily as a result of the timing of scheduled plant maintenance. We conduct scheduled maintenance periodically each year, which requires that individual boiler and/or turbine units temporarily cease operations. During these scheduled maintenance periods, we incur material repair and maintenance expense and receive less revenue until the boiler and/or turbine units resume operations. This scheduled maintenance usually occurs during periods of off-peak electric demand and/or lower waste volumes, which are our first, second and fourth fiscal quarters. The scheduled maintenance period in the first half of the year (primarily first quarter and early second quarter) is typically the most extensive, while the third quarter scheduled maintenance period is the least extensive. Given these factors, we normally experience our lowest operating income from our projects during the first half of each year.

During the first half of 2020, we experienced some modest delays in our normal scheduled maintenance activities due to the novel coronavirus ("COVID-19') related quarantines, travel restrictions and social distancing requirements. As a result, our scheduled maintenance was more heavily weighted towards the second half of the year than it has been historically.

Our operating results may also be affected by seasonal weather extremes during summers and winters. Increased demand for electricity and natural gas during unusually hot or cold periods may affect certain operating expenses and may trigger material price increases for a portion of the electricity and steam we sell.

Performance - Our WtE facilities have historically demonstrated consistent reliability; our average boiler availability was 91.3% in 2020. We have historically met our operating obligations without experiencing material unexpected service interruptions or incurring material increases in costs. In addition, with respect to many of our contracts, we generally have limited exposure for risks not within our control. Across our fleet of facilities, we operate and maintain a large number of
12

Table of Contents
combustion units, turbine generators, and air-cooled condensers, among other systems. On an ongoing basis, we assess the effectiveness of our preventative maintenance programs, and implement adjustments to those programs in order to improve facility safety, reliability and performance. These assessments are tailored to each facility's particular technologies, age, historical performance and other factors. As our facilities age, we expect that the scope of work required to maintain our portfolio of facilities will increase in order to replace or extend the useful life of facility components and to ensure that historical levels of safe, reliable performance continue. For additional information about such risks and damages that we may owe for unexcused operating performance failures, see Item 1A. Risk Factors — Operation of our businesses involves significant risks, which could have an adverse effect on our cash flows and results of operations. In monitoring and assessing the ongoing operating and financial performance of our businesses, we focus on certain key factors: tons of waste processed, electricity and steam sold, boiler availability, plant operating expense and safety and environmental performance.

Waste, Energy and Metals Markets - We compete in waste markets that are highly competitive. In the U.S., the market for waste management is almost entirely price-driven and is greatly influenced by economic factors within regional waste markets. These factors include:

regional population and overall waste production rates;
the number of waste disposal sites (including principally landfills, other WtE facilities and transfer stations) in existence or in the planning or permitting process;
the available disposal capacity (in terms of tons of waste per day) that can be offered by other regional disposal sites;
the extent to which local governments seek to control transportation and/or disposal of waste within their jurisdictions;
the extent to which local governments and businesses continue to value sustainable approaches to handling of wastes; and
the availability and cost of transportation options (e.g., rail, inter-modal, trucking) to provide access to more distant disposal sites, thereby affecting the size of the waste market itself.

Waste service providers seek to obtain waste supplies for their facilities by competing on price (usually on a per-ton basis) with other service providers. At our facilities, where a service fee structure exists, we typically do not compete in this market because we do not have the contractual right to solicit merchant waste. At these facilities, the client community is responsible for obtaining the waste, if necessary by competing on price to obtain the tons of waste it has contractually promised to deliver to us. At our WtE facilities governed by tip fee structures and our waste procurement services businesses, we are responsible for obtaining waste supply, and therefore, actively compete in these markets to enter into spot, medium- and long-term contracts. These WtE projects are generally in densely-populated areas, with high waste generation rates and numerous large and small participants in the regional market. Our waste operations are largely concentrated in the northeastern U.S. See Item 1A. Risk Factors — Our waste operations are concentrated in one region and expose us to regional economic or market declines for additional information concerning this geographic concentration. Certain of our competitors in these markets are vertically-integrated waste companies, which include waste collection operations, and thus have the ability to control supplies of waste, which may restrict our ability to offer services at attractive prices. Our business does not include traditional waste collection operations.

If a long-term contract expires and is not renewed or extended by a client community, our percentage of contracted processing capacity will decrease and we will need to compete in the regional market for waste supply at the facilities we own, from both municipal and commercial services. At that point, we will compete on price with landfills, transfer stations, other WtE facilities and other waste technologies that are then offering disposal or other services in the region.

Our sustainable service offerings seek to respond to increasing customer demand for environmentally preferred waste handling and disposal, as well as specific business risk mitigation requirements for certain materials. For these services, we compete with many large and small companies offering these services, in local and regional waste markets that are similarly influenced by the factors noted above which affect the broader waste markets.

We currently sell a portion of our electricity and other energy product output pursuant to contracts, and for this portion of our energy output we do not compete on price. For the portion of our energy output that we sell into competitive energy markets, we have entered into hedging arrangements in order to mitigate our exposure to price volatility, and we expect to continue to do so in the future. Our efforts in this regard involve only mitigation of price volatility for the energy we produce and will not involve speculative energy trading.

For the portion of our portfolio that is exposed to electricity markets, we expect prices will be driven by several factors including natural gas supply/demand conditions, regional electricity supply/demand factors, regional transmission and natural
13

Table of Contents
gas supply capacity and system conditions, weather conditions, and emerging environmental regulations. All of these factors will have national and regional impacts that affect electricity and steam prices.

Electricity and steam prices in the markets where the majority of our facilities are located are heavily impacted by movements in natural gas prices. The substantial increase in unconventional or shale gas supply has created downward pressure on gas prices relative to historical levels and therefore on prices for the electricity we sell that is not under contract. However, when demand for gas is high during certain seasons or weather conditions, the gas pipeline system has been limited in its ability to transport enough gas to certain regions, such as New England and California. As a result, gas prices can experience short-term spikes, and electricity prices follow.

Several long-term trends are expected to affect U.S. natural gas prices; including shale gas production, storage capacity, liquefied natural gas exports, regulation, coal plant retirements, as well as industrial, transportation and residential demand. Furthermore, regional natural gas prices, especially in the Northeast are expected to be affected by changes in regional production and transportation capacity.

We generally enter into short-term contracts tied to floating market index prices for sales of recovered ferrous and non-ferrous metals with processors and end-users (i.e., mills). We compete with other suppliers who are generally not in the WtE industry and whose product may be less costly to process than metals from WtE sources. Recycled metal prices for both ferrous and non-ferrous materials are impacted directly and indirectly by tariff and trade actions both by the U.S. and foreign governments. Efforts in early 2020 by the U.S. government to place tariffs on imported steel and aluminum increased domestic demand for our products.

Markets for New Project Development - Market conditions for new WtE project development are generally more favorable in select international markets, such as the UK, as compared to the U.S. This is due to a variety of factors which exist in these markets including higher prevailing market tip fees and/or energy revenues, the absence of available land for alternative disposal techniques (i.e., landfilling), and regulatory policy support which favors technologies such as WtE. Therefore, our ongoing WtE project development initiatives are generally outside of the U.S. We have and expect to evaluate opportunities for project development in the U.S., such as facilities for metals, ash processing and recycling, in order to enhance the efficiency and competitiveness of our WtE operations.

Brexit Implications - In March, 2017, the UK formally notified the EU of its intention to leave the EU (so-called “Brexit”), and on January 31, 2020, the UK formally severed political ties and left the EU. The UK’s economic ties to the EU and its existing trading arrangements with both the EU and countries outside the EU (including the U.S.) remained in place pending trade agreement renegotiations during a “standstill” transition period through December 31, 2020. The COVID-19 pandemic has created additional challenges in finalizing these trade agreements, but the UK reached a trade deal with the EU on December 24, 2020 ahead of the UK leaving the EU's single market and customs union on December 31, 2020. The UK is now negotiating and renegotiating its trade arrangements with non-EU countries. We have studied and consulted with local experts regarding the potential market and economic impacts of Brexit on the UK, with a particular focus on potential impacts to the waste and energy markets as they might affect our plans to expand our business with GIG. The government of the UK has shown no indication of an intention to rollback or reverse its policy support for environmental protection generally, the renewables market, or for WtE specifically. As such, while Brexit may have some impact on construction costs and schedule for both existing and potential new UK WtE projects, we do not believe that Brexit will materially impact the key market and economic drivers for investment in the combined pipeline of WtE projects we are pursuing jointly with GIG. For further information, see Item 8. Financial Statements and Supplementary Data — Note 3. New Business and Asset Management — Green Investment Group Limited (“GIG”) Joint Venture.

Impact of COVID-19 on the U.S. and the global economy

The COVID-19 pandemic has impacted, and is expected to continue to impact, our employees, our operations, our business and the economy. In early 2020, we began to see impacts from COVID-19 on the economy and commercial activity in the U.S., resulting in reduced volumes and disruptions in waste markets. We have seen an increase in commercial activity and a stabilization of business conditions from the lows in the second quarter of 2020, but the extent of potential impacts from COVID-19 in the future remains uncertain. We cannot predict the potential future impact of the COVID-19 pandemic with new variants of the virus circulating and delays in distributing and administering the vaccine, and it could materially and adversely affect our business, financial condition and results of operations in the future. For a full discussion of risks associated with COVID-19, see Part I — Item 1A. Risk Factors.

14

Table of Contents
While a limited number of our employees have contracted COVID-19, we have followed recommended protocols and have thus far not experienced material disruptions to our operations as result of workforce availability issues. Depending upon the rate, extent, and location of future COVID-19 infection, more widespread infection of our employees could cause significant increases to operating expenses at specific facilities or the curtailment of operations at such facilities on a temporary basis.

Our WtE plants and material processing facilities provide a vital service to our municipal and commercial clients. As waste disposal facilities, they have been recognized as part of Critical Infrastructure by the Department of Homeland Security and as essential services by state and local governments. While we remain a primary waste outlet for numerous municipalities and commercial customers, the downturn in economic activity in 2020 affected patterns and volumes of waste generation. Residential waste represents the substantial majority of our contracted volumes. While we experienced limited reduction in these volumes during the early stages of the pandemic, residential volumes have returned to, and in some areas exceeded, pre-pandemic levels. We also process commercial waste, including profiled waste, at many facilities. Volumes of these materials for disposal fell during the early stages of the pandemic, which required us to internalize more waste volumes from our transfer station network as well as access third party replacement waste volumes at a lower revenue basis per ton. Volumes of commercial waste generally have returned closer to pre-pandemic levels, and revenue per ton levels have returned as well. Three of our WtE facilities are currently permitted to accept Regulated Medical Waste (“RMW”). While we have received some COVID-19 RMW material to date, we have seen reductions in other types of RMW, and thus overall volumes of RMW have not materially changed as a result of the pandemic.

The COVID-19 pandemic had a dampening effect on prices in these markets. Such factors have caused, and may continue to cause, the portion of our energy revenue exposed to the market and/or our recycled metals revenue to fluctuate to an extent that may materially affect our quarterly and annual financial results. During 2020, the commodity markets into which we sold energy and metals were at levels significantly below prior periods.

Although our operations have experienced only limited disruption to date, we have incurred, and expect to continue to incur, additional costs associated with instituting measures to ensure employee safety, access to contractors needed for construction and maintenance activities, and delays of previously scheduled projects that have been placed on hold or rescheduled to later in the year.

Most of the construction activity at our equity method investment projects in the UK has continued during the pandemic, and we are working to mitigate any impacts. In England, construction activities have been considered essential and so the Rookery and Newhurst sites, adhering to guidance set by Public Health England, have generally proceeded on schedule. The government in Scotland initially took a different approach, and construction at the Earls Gate site was suspended or curtailed through early June, but subsequently resumed.

In light of the uncertainty around the macroeconomic impacts of COVID-19, we implemented a program of expense reduction intended to mitigate the financial impacts to our business, with an initial goal of reducing 2020 costs by $15 million to $30 million. This program included several elements among which were:

Eliminating all non-essential travel and reducing discretionary spend;
Enacting a hiring freeze for new corporate employees;
Lowering compensation through a 50% reduction in payment of CEO's base salary amount, a 25% reduction in payment of executive leadership base salary amounts, and a 20% reduction in cash compensation for all corporate support employees through a combination of wage reductions and furloughs. These measures remained in place through mid-July 2020;
Lowering the cash portion of board of directors' fees by 60% during the same time period as management reductions and furloughs;
Focusing growth investments primarily on UK projects and the start-up of our first Total Ash Processing System ("TAPS") and remaining highly disciplined in making any additional discretionary investments; and
Lowering the annualized dividend payout to $0.32 per share.

These efforts resulted in cost savings of approximately $24 million in 2020. Most of these efforts were targeted at offsetting the negative impact of the pandemic on 2020 results and are unlikely to re-occur in 2021.

As the COVID-19 pandemic is ongoing and the near term worldwide economic outlook remains uncertain, we cannot reasonably estimate the length or severity of this pandemic, or the extent to which the disruption may materially impact the Company's consolidated financial statements.
15

Table of Contents
Technology, Research and Development

In our WtE business, we own and/or operate WtE facilities that utilize various technologies from several different vendors, including mass-burn combustion technologies and refuse-derived fuel technologies which include pre-combustion waste processing not required with a mass-burn design. As we continue our efforts to develop and/or acquire additional WtE projects internationally, we will consider mass-burn combustion and other technologies that best fit the needs of the local environment of a particular project.

We believe that all forms of WtE technologies offer an environmentally superior solution to post-recycled waste management and energy challenges faced by leaders around the world, and that our efforts to expand our business will be enhanced by the development of additional technologies in such fields as emission controls, residue disposal, alternative waste treatment processes, gasification, and combustion controls. We have advanced our research and development efforts in these areas and have developed new and cost-effective technologies that represented major advances in controlling NOx emissions. These technologies, for which patents have been granted, have been tested at existing facilities and we are now operating and/or installing such systems at a number of our facilities. We intend to maintain a focus on research and development of technologies in these and other areas that we believe will enhance our competitive position, and offer new technical solutions to waste and energy problems that augment and complement our business.

A number of other companies are similarly engaged in new technology development focused on extracting energy from waste materials through a variety of technical approaches, including: gasification, pyrolysis or other combustion designs; converting waste to fuels or other commodities; or processing waste to enable co-firing in larger power plants or industrial boilers. Firms engaged in these activities generally are less well-capitalized than Covanta, although some engage in joint ventures with larger and well-capitalized companies. To date, we believe such efforts have not produced technologies that offer economically attractive alternatives in the absence of policy support.

REGULATION OF BUSINESS

Regulations Affecting Our Business

Environmental Regulations — General

Our business activities in the U.S. are extensively regulated pursuant to federal, state and local environmental laws. Federal laws, such as the Clean Air Act and Clean Water Act, and their state counterparts, govern discharges of pollutants to air and water. Other federal, state and local laws, as well as legal and regulatory regimes in international markets, comprehensively govern the generation, transportation, storage, treatment and disposal of solid and hazardous waste and also regulate the storage and handling of chemicals and petroleum products (such laws and regulations are referred to collectively as the “Environmental Regulatory Laws”).

Other federal, state and local laws, such as the Comprehensive Environmental Response Compensation and Liability Act (commonly known as “CERCLA” and collectively referred to with such other laws as the “Environmental Remediation Laws”) make us potentially liable on a joint and several basis for any on site or off site environmental contamination which may be associated with our activities and the activities at our sites. These include landfills we have owned, operated or leased, or at which there has been disposal of residue or other waste generated, handled or processed by our facilities. Some state and local laws also impose liabilities for injury to persons or property caused by site contamination. Some service agreements provide us with indemnification from certain liabilities.

The Environmental Regulatory Laws prohibit disposal of regulated hazardous waste at our municipal solid waste facilities. The service agreements recognize the potential for inadvertent and improper deliveries of hazardous waste and specify procedures for dealing with hazardous waste that is delivered to a facility. Under some service agreements, we are responsible for some costs related to hazardous waste deliveries. We have not incurred material hazardous waste disposal costs to date.

The Environmental Regulatory Laws also require that many permits be obtained before the commencement of construction and operation of any waste or renewable energy project, and further require that permits be maintained throughout the operating life of the facility. We can provide no assurance that all required permits will be issued or re-issued, and the process of obtaining such permits can often cause lengthy delays, including delays caused by third-party appeals challenging permit issuance. Our failure to meet conditions of these permits or of the Environmental Regulatory Laws can subject us to regulatory enforcement actions by the appropriate governmental authority, which could include fines, penalties, damages or other sanctions, such as orders requiring certain remedial actions or limiting or prohibiting operation. See Item 1A. Risk Factors — Compliance with environmental laws, including changes to such laws, could adversely affect our results of operations. To date, we have not
16

Table of Contents
incurred material penalties, been required to incur material capital costs or additional expense, or been subjected to material restrictions on our operations as a result of violations of Environmental Regulatory Laws or permit requirements.

While we believe that we are in compliance with existing Environmental Regulatory and Remediation Laws, we may be identified, along with other entities, as being among parties potentially responsible for contribution to costs associated with the correction and remediation of environmental conditions at disposal sites subject to CERCLA and/or analogous state Environmental Remediation Laws. Our ultimate liability in connection with such environmental claims will depend on many factors, including our volumetric share of waste, the total cost of remediation, and the financial viability of other companies that have also sent waste to a given site and, in the case of divested operations, our contractual arrangement with the purchaser of such operations.

The Environmental Regulatory Laws may change. New technology may be required or stricter standards may be established for the control of discharges of air or water pollutants, for storage and handling of petroleum products or chemicals, or for solid or hazardous waste or ash handling and disposal. Thus, as new technology is developed and proven, we may be required to incorporate it into new facilities or make major modifications to existing facilities. This new technology may be more expensive than the technology we use currently.

Environmental Regulations — Recent Developments

Domestic

Maximum Achievable Control Technology ("MACT") Rules — EPA is authorized under the Clean Air Act to issue rules periodically which tighten air emission requirements to achievable standards, as determined under a specified regulatory framework. EPA is required to establish these MACT rules for a variety of industries, including new and existing municipal waste combustion (“MWC”) units, industrial boilers and solid waste incinerators. All of our facilities comply with all applicable MACT rules currently in effect.

EPA has an obligation to complete a combined Risk and Technology Review ("RTR") for the large MWC source category and will subsequently propose revised MWC MACT rules. While the scope of and timing for implementation of RTR for the MWC source category is uncertain, the resulting revised MWC MACT may lower existing MWC MACT emission limits for most, if not all, regulated air pollutants emitted by our facilities, and may require capital improvements and/or increased operating costs. We are unable at this time, to estimate the magnitude of such costs, which may be material, or to determine the potential impact on the profitability of our MWC facilities.

In some cases, the costs incurred to meet the revised MACT rules at facilities may be recovered from public sector clients and other users of our facilities through increased fees permitted to be charged under applicable contracts; however, to the extent we incur costs at other of our facilities to meet the applicable MACT rules, such costs are not subject to contractual recovery and instead will be borne directly by the affected facilities.

New Jersey Environmental Justice Legislation — In September 2020, New Jersey passed a new environmental justice law requiring the New Jersey Department of Environmental Protection to evaluate the environmental and public health impacts of certain facilities, including waste management facilities, on overburdened communities when reviewing certain permit applications. While all three of our New Jersey WtE facilities fall within the new law, implementing legislation is still being developed and we cannot estimate the impact on our business at this time. Given our strong environmental performance, our continuing investments in improved environmental controls, our commitment to environmental justice, and the relatively minor contribution of our facilities to the air impacts in our local communities, we do not believe that any adverse impacts will be material.

International

Implementation of a revised Best Available Techniques Reference Document for Waste Incineration (WI BREF) — In the EU, legislation affects our business primarily in the form of “Directives” which are binding on member states and which are implemented through national enabling legislation. The EU has finalized an Industrial Emissions Directive (the so-called “WI BREF Directive”) which affects emissions from WtE facilities as of November 2019. Within four years from the WI BREF publication date of December 3, 2019, all existing WI facilities are required to revise their respective permits and incorporate the WI BREF directive requirements. A WI facility is considered to be existing if it is permitted even if it has not yet begun operations. The finalized WI BREF will also impact future permitting of new facilities in member states, as well as other jurisdictions that base their requirements on EU Directives (which would include the UK whether or not it leaves the EU). Based on the published WI BREF directive and the pending publication of a WI BREF interpretative document by the UK
17

Table of Contents
Environmental Agency, we do not believe that the WI BREF Directive will have a material adverse effect on any of the UK WtE projects or the Dublin WtE facility or our ability to execute on our plans to develop future WtE projects in the UK.

European Union Capacity Market GHG Limitations In 2019, the European Parliament passed a new Directive on the internal market for electricity that sets fossil fuel CO2 intensity thresholds to determine eligibility to participate in the European capacity markets. Less efficient WtE facilities and those receiving wastes with high amount of fossil-based carbon (i.e. plastics) could exceed the thresholds. However, guidance on the rule provides individual member states flexibility to applying the thresholds for WtE facilities. Ireland’s current calculation approach for carbon intensity accounts for the methane avoidance benefits of keeping waste out of landfills and the UK has signaled it intends to continue to exclude waste from the definition of fossil fuel. Based on the guidance and the position taken to date by Ireland and the UK, we do not believe that the capacity mechanism directive will have a material impact on our current operations or our plans to develop WtE projects in the UK.

Energy Regulation

Our businesses are subject to the provisions of federal, state and local energy laws applicable to the development, ownership and operation of facilities located in the U.S. The Federal Energy Regulatory Commission (“FERC”), among other things, regulates the transmission and the wholesale sale of electricity in interstate commerce under the authority of the Federal Power Act (“FPA”). In addition, under existing regulations, FERC determines whether an entity owning a generation facility is an Exempt Wholesale Generator (“EWG”), as defined in the Public Utility Holding Company Act of 2005 (“PUHCA 2005”). FERC also determines whether a generation facility meets the technical and other criteria of a Qualifying Facility (cogeneration facilities and other facilities making use of non-fossil fuel power sources, such as waste, which meet certain size and other applicable requirements, referred to as “QFs”), under the Public Utility Regulatory Policies Act of 1978, as amended (“PURPA”). Each of our U.S. generating facilities has either been determined by FERC to qualify as a QF or is otherwise exempt from the relevant regulations, or the subsidiary owning the facility has been determined to be an EWG.

Federal Power Act — The FPA gives FERC exclusive rate-making jurisdiction over the wholesale sale of electricity and transmission of electricity in interstate commerce. Under the FPA, FERC, with certain exceptions, regulates the owners of facilities used for the wholesale sale of electricity or transmission of electricity in interstate commerce as public utilities. The FPA also gives FERC jurisdiction to review certain transactions and numerous other activities of public utilities. Most of our QFs are currently exempt from FERC’s rate regulation under the FPA because (i) the QF is 20 MW or smaller; (ii) its sales are made pursuant to a state regulatory authority’s implementation of PURPA; (iii) the QF is owned by a municipality or subdivision thereof; or (iv) its sales are made pursuant to a contract executed on or before March 17, 2006. Our QFs that are not exempt, or that lose these exemptions from rate regulation, are or would be required to obtain market-based rate authority from FERC or otherwise make sales pursuant to rates on file with FERC.

Under the FPA, public utilities are required to obtain FERC’s acceptance of their rate schedules for the wholesale sale of electricity. Our generating companies in the U.S. that are not otherwise exempt from FERC’s rate regulation make sales of electricity pursuant to market-based rates or other rates authorized by FERC. With respect to our generating companies with market-based rate authorization, FERC has the right to suspend, revoke or revise that authority and require our sales of energy to be made on a cost-of-service basis if FERC subsequently determines that we can exercise market power, create barriers to entry, or engage in abusive affiliate transactions. In addition, amongst other requirements, our market-based rate sellers are subject to certain market behavior and market manipulation rules and, if any of our subsidiaries were deemed to have violated any one of those rules, such subsidiary could be subject to potential disgorgement of profits associated with the violation and/or suspension or revocation of market-based rate authority, as well as criminal and civil penalties. If the market-based rate authority for one (or more) of our subsidiaries was revoked or it was not able to obtain market-based rate authority when necessary, and it was required to sell energy on a cost-of-service basis, it could become subject to the full accounting, record keeping and reporting requirements of FERC. Even where FERC has granted market-based rate authority, FERC may impose various market mitigation measures, including price caps, bidding rules and operating restrictions where it determines that potential market power might exist and that the public interest requires such potential market power to be mitigated. A loss of, or an inability to obtain, market-based rate authority could have a material adverse impact on our business. We can offer no assurance that FERC will not revisit its policies at some future time with the effect of limiting market-based rate authority, regulatory waivers, and blanket authorizations.

Under the Energy Policy Act of 2005 (“EPAct 2005”), FERC has approved the North American Electric Reliability Corporation, or “NERC,” to address the development and enforcement of mandatory reliability standards for the wholesale electric power system. Certain of our subsidiaries are responsible for complying with the standards in the regions in which we operate. NERC also has the ability to assess financial penalties for non-compliance. In addition to complying with NERC requirements, certain of our subsidiaries must comply with the requirements of the regional reliability council for the region in
18

Table of Contents
which that entity is located. Compliance with these reliability standards may require significant additional costs, and noncompliance could subject us to regulatory enforcement actions, fines, and increased compliance costs.

Public Utility Holding Company Act of 2005 — PUHCA 2005 provides FERC with certain authority over and access to books and records of public utility holding companies not otherwise exempt by virtue of their ownership of EWGs, QFs, and Foreign Utility Companies, as defined in PUHCA 2005. We are a public utility holding company, but because all of our generating facilities have QF status, are otherwise exempt, or are owned through EWGs, we are exempt from the accounting, record retention, and reporting requirements of PUHCA 2005 and FERC’s right to access our books and records is limited in scope.

Public Utility Regulatory Policies Act — PURPA was passed in 1978 in large part to promote increased energy efficiency and development of independent power producers. PURPA created QFs to further both goals, and FERC is primarily charged with administering PURPA as it applies to QFs. FERC has promulgated regulations that exempt QFs from compliance with certain provisions of the FPA, PUHCA 2005, and certain state laws regulating the rates charged by, or the financial and organizational activities of, electric utilities. The exemptions afforded by PURPA to QFs from regulation under the FPA and most aspects of state electric utility regulation are of great importance to us and our competitors in the WtE and independent power industries.

PURPA also initially included a requirement that utilities must buy and sell power to QFs. Among other things, EPAct 2005 eliminated the obligation imposed on utilities to purchase power from QFs at an avoided cost rate where the QF has non-discriminatory access to wholesale energy markets having certain characteristics, including nondiscriminatory transmission and interconnection services. In addition, FERC had previously established a regulatory presumption that QFs with a capacity greater than 5 MW have non-discriminatory access to wholesale energy markets in most geographic regions in which we operate. In 2020, FERC Order 872, extended the rebuttable presumption that QFs have nondiscriminatory access to markets to all facilities above 5 MW, rather than 20 MW. However, FERC also established that a subset of QFs with capacities between 5 MW and 20 MW could rebut the presumption provided that the predominant purpose of the QF is other than the sale of electricity. Further modifications to PURPA included greater flexibility by the utility with regard to terms and conditions of QF contracts, although the impacts of these provisions are uncertain at this time. As a result, many of our expansion, renewal and development projects must rely on competitive energy markets rather than PURPA’s historic avoided cost rates in establishing and maintaining their viability.

Outside the context of a long-term contract and dependent on state action, recent changes to FERC regulations could also affect the rates for QF energy sales to a utility pursuant to PURPA purchase obligations. In some states, this could mean that outside the context of a long-term contract, QFs that were formerly entitled to a fixed avoided cost rate for energy sales pursuant to the PURPA purchase obligation may now receive a variable energy rate. However, it is not certain how states will react to the new FERC regulations.

RTOs and ISOs — Many of our projects operate in or have access to organized energy markets, known as regional transmission organizations ("RTOs") or independent system operators ("ISOs"). Each organized market subject to FERC jurisdiction administers centralized energy, capacity and ancillary services markets pursuant to tariffs approved by FERC. These tariffs and rules prescribe requirements on how the energy, capacity and ancillary service markets operate, how market participants bid, clear, are dispatched, make bilateral sales with one another, and how entities with market-based rates are compensated. Certain of these markets set prices, referred to as Locational Marginal Prices that reflect the value of energy, capacity or certain ancillary services, based upon geographic locations, transmission constraints, and other factors. Each market is subject to market mitigation measures designed to limit the exercise of market power. These market structures may affect the bidding, operation, dispatch and sale of energy, capacity and ancillary services from our projects that rely on competitive energy markets rather than PURPA’s avoided cost rates.

Policy Debate Regarding Climate Change and Renewable Energy

The public and political debate over GHG emissions (principally CO2 and methane) and their contribution to climate change continues both internationally and domestically. We expect this debate to continue. The incoming Biden administration has identified addressing climate change as one of its priorities and has already taken steps to rejoin the Paris Climate Agreement. Any resulting regulations could in the future affect our business. As is the case with all combustion, our facilities emit CO2, however WtE is recognized as creating net reductions in GHG emissions and is otherwise environmentally beneficial, because it:

avoids CO2 emissions from fossil fuel power plants;
avoids methane emissions from landfills; and
avoids GHG emissions from mining and processing metal because it recovers and recycles metals from waste.
19

Table of Contents

In addition, WtE facilities are a resilient domestic source of baseload energy, preserve land, and are typically located close to the source of the waste and thus typically reduce fossil fuel consumption and air emissions associated with long-haul transportation of waste to landfills.

For policy makers at the local level who make decisions on sustainable waste management alternatives, we believe that using WtE instead of landfilling will result in significantly lower net GHG emissions, while also introducing more control over the cost of waste management and supply of local electrical power. We are actively engaged in encouraging policy makers at state and federal levels to enact legislation that supports WtE as a superior choice for communities to avoid both the environmental harm caused by landfilling waste, and reduce local reliance on fossil fuels as a source of energy.

Many of these same policy considerations apply equally to other renewable technologies. The extent to which such potential legislation and policy initiatives will affect our business will depend in part on whether WtE and our other renewable technologies are included within the range of clean technologies that could benefit from such legislation.

Several initiatives have been developed at the state or regional levels, and some initiatives exist in regions where we have projects. For example:

The Regional Greenhouse Gas Initiative (“RGGI”) is an operating regional “cap-and-trade” program focused on fossil fuel-fired electric generators which does not directly affect WtE facilities. We operate one fossil-fuel fired boiler at our Niagara facility included in the RGGI program.
California's Global Warming Solutions Act of 2006 ("AB 32"), seeks to reduce GHG emissions in California in part through an economy-wide “cap-and-trade” program. WtE facilities were exempt from the cap-and-trade program through the end of 2017 but began incurring a compliance obligation in 2018. We have established a reserve to procure allowances as necessary to meet our compliance obligation. The current regulation provides transition assistance to WtE facilities. A resolution passed by the Board of the California Air Resources Board (“CARB”) directs the agency to provide additional transition assistance to WtE facilities in a subsequent revision to the regulation. The specific degree of additional assistance to be provided is uncertain at this time.
In 2019, the New York State legislature passed the Climate Leadership and Community Protection Act which put the state on the path to achieve net zero GHG emissions by 2050. The state is currently beginning the process of developing specific policies and regulations to implement the legislation. We are actively engaged in the regulatory development process, including through participation in a state-led waste sector working group by appointment by the state’s environmental regulator. The State has recognized that the main source of GHG emissions from the waste sector is from methane via organic waste decomposition in landfills. Given WtE’s international recognition as a means of reducing GHG emissions by avoiding methane from the waste management sector, we expect WtE facilities will have an important role to play in the transition to a net zero economy; however, the exact impact on our business in New York is uncertain at this time.

International Climate Change Policies

Certain international markets in which we compete have recently adopted regulatory or policy frameworks that encourage WtE projects as important components of GHG emission reduction strategies, as well as waste management planning and practice.

The European Union

Historically, the EU has adopted legislation which requires member states to reduce the utilization of and reliance upon landfill disposal, including (1) Directive 1999/31/EC concerning the landfill of waste (known as the “Landfill Directive”) which imposes operational and technical controls on landfills and restricts, on a reducing scale, the amount of biodegradable municipal waste which member states may dispose of to landfill; and (2) Directive 2008/98/EC on waste (known as the revised “Waste Framework Directive”) which enshrines the waste hierarchy to divert waste from landfill and underpins a preference for efficient WtE for the recovery of value from residual wastes.

In July 2018, the EU finalized its Circular Economy Package ("CEP"), amending several of the Directives described above to advance a more circular economy. Included within the CEP are the continued preference for efficient energy recovery over landfilling, increased targets for recycling and reuse, and new limits on landfilling.

20

Table of Contents
To date, WtE has not been subject to the EU’s Emissions Trading Scheme ("ETS"), one of the primary policy mechanisms for the EU to achieve its GHG reduction targets. In light of increased climate ambition on the part of the EU, the European Commission has published an Inception Impact Assessment as part of its consultation process on changes to the ETS necessary to help the region meet its new GHG reduction target of 55% by 2030 relative to 1990. WtE has been listed as a potential new sector for inclusion in the ETS in the future. As the public consultation is just beginning, we cannot predict the outcome of this process or the potential impact at this time.

Brexit Implications

With respect to the impact of Brexit in the UK, we have studied and consulted with local experts regarding the potential regulatory impacts, with a particular focus on potential impacts to the waste and energy markets as they might affect our plans to expand our business with GIG. For further information, see Item 8. Financial Statements And Supplementary Data — Note 3. New Business and Asset Management — Green Investment Group Limited (“GIG”) Joint Venture. The government of the UK has shown no indication of an intention to rollback or reverse its policy support for environmental protection generally, the renewables market, or for WtE specifically, including with respect to the Directives described above. As such, while we can provide no assurance, we do not believe Brexit will materially impact the key regulatory drivers for investment in the combined pipeline of WtE projects we are pursuing jointly with GIG.
 
Employee Health and Welfare

We are subject to numerous regulations enacted to protect and promote worker health and welfare through the implementation and enforcement of standards designed to prevent illness, injury and death in the workplace. The primary law relating to employee health and welfare applicable to our business in the U.S. is the Occupational Safety and Health Act of 1970 ("OSHA"), which establishes certain employer responsibilities including maintenance of a workplace free of recognized hazards likely to cause illness, death or serious injury, compliance with standards promulgated by OSHA, and assorted reporting and record keeping obligations, as well as disclosure and procedural requirements. Various OSHA standards apply to certain aspects of our operations.

Employee health and welfare laws governing our business in foreign jurisdictions include the Workplace Health and Safety Directive and the Directive concerning ionizing radiation in the EU, and various provisions of the Canada Labour Code and related regulations in Canada.

HUMAN CAPITAL

Our employees are essential to our business and our success. We are committed to attracting the best talent, hiring and retaining a diverse workforce, and creating a safe, respectful, equitable, and inclusive work environment for all employees, regardless of age, sex, gender, religion, race, ethnicity or sexual orientation.

As of December 31, 2020, we employed approximately 4,000 full-time employees, approximately 3,700 are located in the U.S., with the remainder of employees located in Canada, Ireland, the UK and China.

In the U.S., approximately 300 employees are based at our headquarters in Morristown, NJ, while approximately 3,400 employees are based in facilities across the U.S. Approximately 300 of our facility-based employees are covered by collective bargaining agreements with various expiration dates through 2024.

Impacts of COVID-19

As a result of the COVID-19 pandemic, beginning March 16, 2020, all corporate and field administrative employees transitioned to working primarily from home, while essential plant employees continued to report to our facilities in order to maintain our operations.

In our operating facilities and our offices, we follow mandatory and recommended health and safety protocols. While some of our employees have contracted COVID-19, we have not experienced material disruptions to our operations as a result of illnesses, quarantines, or other workforce or workplace disruptions. Effective September 14, 2020, we reopened our offices in Morristown, NJ, in a limited capacity; however, most employees continue to work primarily from home due to pandemic safety precautions.

21

Table of Contents
Diversity, Equity and Inclusion ("DE&I")

We believe that a diverse and inclusive workforce is a stronger and more productive workforce; one that is more capable of solving problems, innovating, and meeting our business goals and the goals of our clients, partners and stockholders. We serve diverse communities, we live and work in those communities, and we are committed to taking action so that our workforce better reflects the diversity of the communities in which we operate.

Our DE&I Leadership Council includes cross-functional executive leadership and is charged with establishing and advancing our diversity, equity and inclusion goals. In 2019, Covanta joined CEO Action for Diversity and Inclusion (“CEO Action”), and in 2020, one of our leaders joined CEO Action as part of a one-year fellowship to help promote corporate best practices to promote diversity and address systemic racism and social injustice.

Since 2011, we have published a Sustainability Report including transparent information on our workforce diversity, including gender and ethnicity. We announced our first goal around diversity and inclusion in 2016 and have made periodic updates to our goal since that time.

Today, as part of our commitment to DE&I and to better reflect the diversity of the communities in which we operate, we have committed to increasing the recruitment and retention of a more diverse workforce, and specifically to improving our recruitment and retention of female and black employees across our company and specifically in leadership roles. We also conduct regular pay equity reviews to ensure that we are paying diverse groups of employees equitably. We report our progress and review our goals with the Compensation and Nominating and Governance Committees of our Board of Directors.

2020 Workforce Diversity

WomenMen
Gender Diversity
12%
88%
MinorityNon-Minority
Ethnic Diversity
30%
70%

In 2020, we piloted new unconscious bias training, following the completion in 2019 of a company-wide diversity and inclusion training program. Also, in recent years we established company-wide Employee Resource Groups ("ERGs"), to promote diversity and support amongst our employees with shared interests and experiences. We currently have five ERGs; Women of Covanta: RISE, Early Career Connections, Black Professionals, Sustainability, and LatinX.

Succession and Recruitment

In response to changing trends inside and outside of the Company, we have undertaken several programs to better prepare for retirements in our workforce, knowledge transfer, and the hiring, training, and development of a new generation of workers. In addition to our undergraduate internship program, we implemented a mentoring program in 2017 and an Early Career Development Program in 2018. We believe Covanta’s commitment to developing sustainable solutions for society and the environment is attractive to current and upcoming generations of workers who desire to actively engage in the drive to improve future environmental outcomes.

For many years, Covanta has also made concerted efforts to recruit and hire more veterans, and we are proud that veterans make up approximately 10% of our total workforce.
22

Table of Contents
EXECUTIVE OFFICERS OF THE REGISTRANT

A list of our executive officers and their business experience follows. Ages shown are as of February 1, 2021.
Name and TitleAgeExperience
Michael W. Ranger President and Chief Executive Officer62Mr. Ranger was appointed President and CEO of Covanta in October 2020. Mike has been a member of the board of directors since September 2016 and prior to his appointment as President and CEO served as Chair of the Audit Committee. Mr. Ranger was co-founder and senior managing director of Diamond Castle Holdings, LLC, a private equity investment firm focusing on energy and power, healthcare, financial services and other diversified industries. Before founding Diamond Castle Holdings, he was co-chairman of DLJ Global Energy Partners. Previously, he was an investment banker in the energy and power sector for 20 years, most recently as head of the Domestic Power Group at Credit-Suisse First Boston and prior to that as group head of Global Energy & Power at DLJ. Before joining DLJ, he was a senior vice president in the Energy & Utility Group at Drexel Burnham Lambert and was a member of the Utility Banking Group at Bankers Trust. He is on the board of directors at Consolidated Edison, Inc., where is he lead independent director and Chair of the Corporate Governance and Nominating Committee.
Bradford J. Helgeson Executive Vice President and Chief Financial Officer44Executive Vice President and Chief Financial Officer since 2013. Mr. Helgeson served as Vice President and Treasurer from 2007 to 2013. Prior to joining Covanta in 2007, Mr. Helgeson was Vice President, Finance and Treasurer at Waste Services, Inc., a publicly-traded environmental services company with operations in the U.S. and Canada, from 2004 to 2007. Prior to these roles, Mr. Helgeson held positions in the investment banking departments at Lehman Brothers from 2000 to 2004 and at Donaldson, Lufkin & Jenrette from 1998 to 2000.
Derek W. Veenhof Executive Vice President, Chief Operating Officer54Mr. Veenhof was appointed as Executive Vice President and Chief Operating Officer in October 2020, served as an Executive Vice President since 2013, served as Senior Vice President (2011-2013) and Vice President (2007-2010) of Covanta commercial subsidiaries managing contracting and market development efforts in waste and metals recycling. From 2002 to 2006, Mr. Veenhof was Covanta’s Area Manager responsible for the Metro NY, NJ and Philadelphia market areas. Mr. Veenhof joined Covanta in 1997, serving as the Niagara Facility Business Manager from 1997 to 2001.
Timothy J. Simpson Executive Vice President, Chief Administrative Officer62Mr. Simpson was appointed Chief Administrative Officer in October 2020 and having previously served as Executive Vice President, General Counsel and Secretary since 2007 and Senior Vice President, General Counsel and Secretary from 2004 to 2007. Previously, he served as Senior Vice President, General Counsel and Secretary of Covanta Energy from March 2004 to October 2004. Mr. Simpson joined Covanta in 1992.
Matthew R. Mulcahy Executive Vice President and Head of Corporate Development57Executive Vice President and Head of Corporate Development since 2017. Mr. Mulcahy served as Senior Vice President and Head of Corporate Development for Covanta from 2012 to 2016 and Senior Vice President of Business Development from 2007 through 2011. From 2003 to 2007, Mr. Mulcahy served as Vice President of Covanta Secure Service and TransRiver Marketing, a Covanta subsidiary. From 2000 to 2003, Mr. Mulcahy was Covanta’s Vice President, Project Implementation. Mr. Mulcahy joined Covanta in 1990.
Thomas L. Kenyon Executive Vice President, General Counsel and Secretary50Mr. Kenyon was appointed General Counsel in October 2020. He joined Covanta in March 2020 as Senior Vice President, Deputy General Counsel, following nearly 17 years with Air Products and Chemicals, Inc. based in Allentown, PA, where he served most recently as General Counsel, Americas.
Paul E. Stauder Senior Vice President and President, Covanta Environmental Solutions55Senior Vice President since 2016 and President of Covanta Environmental Solutions, a subsidiary of Covanta Energy, since 2015. Mr. Stauder served as Senior Vice President of Business Management for Covanta Energy from 2008 to 2014, with primary responsibility for all commercial and client aspects of Covanta’s WtE facilities. Prior to that role, Mr. Stauder served in a number of positions with Covanta Energy, including Regional Vice President, overseeing WtE plants and independent power plants. Mr. Stauder joined Covanta in 1997.
Virginia D. Angilello Senior Vice President and Chief Human Resources Officer51Ms. Angilello was appointed Senior Vice President and Chief Human Resources Officer in 2018. Prior to joining Covanta, she worked for more than 17 years in roles of increasing responsibility at Honeywell International. Most recently, she served as Vice President, Human Resources for Performance Materials & Technologies (PMT), Integrated Supply Chain from 2015 to 2018. PMT was a $10 billion business within Honeywell, with more than 90 manufacturing facilities globally. Prior to this position she gained extensive experience in human resources leadership in both HR business partner and HR operations roles from 2007 - 2014, including having led the Honeywell HR Services, Global Operations teams.
Joseph J. Schantz II Vice President and Chief Accounting Officer38Vice president, chief accounting officer for Covanta since April 2020. Mr. Schantz joined Covanta in 2017 as director of technical accounting. Later, he was promoted to senior director and assistant corporate controller. Prior to joining Covanta, Mr. Schantz was a director, SEC/IPO services, at Pine Hill Group, a transaction and advisory firm in Philadelphia, PA. Previously, he held roles in technical accounting at Air Products and Chemicals, Inc., based in Allentown, PA, and in the audit function of Deloitte in Philadelphia, PA, and McLean, VA. Mr. Schantz graduated summa cum laude with a Bachelor of Science degree in Accounting from Liberty University in Lynchburg, VA, and is a Certified Public Accountant.
23

Table of Contents
Item 1A. RISK FACTORS

The following risk factors could have a material adverse effect on our business, financial condition and results of operations.

COVID-19

Our activities were impacted by the COVID-19 pandemic, and there remains a risk that our activities could be further impacted in the future as the COVID-19 pandemic and its effects remain dynamic, whether those effects are local, nationwide or global. Matters outside our control may prevent us from executing on our existing operations or projects in development, limit travel of Company representatives, adversely affect the health and welfare of Company personnel or prevent important vendors and contractors from performing normal and contracted activities.

The current COVID-19 pandemic significantly impacted the national and global economy and commodity and financial markets, and while some markets have stabilized, others remain under pressure and there continues to be a risk that the pandemic and its effects could worsen further. The full extent and near- and long-term impact of the COVID-19 pandemic continues to be unknown and to date has included extreme volatility in financial markets, a significant slowdown in economic activity, extreme volatility in commodity prices (including energy and metals prices) and the potential for a global recession. The response to COVID-19 has led to significant restrictions on travel, temporary business closures, quarantines, global stock market volatility and a general reduction in consumer and construction activity globally. Matters outside our control have affected our business and operations and may begin or may continue to: prevent us from executing on our existing operations and projects in development; limit travel of Company representatives, including between our corporate headquarters in New Jersey and between and among our facilities across the U.S. and in other countries; adversely affect the health and welfare of our personnel; or prevent important vendors and contractors from performing normal and contracted activities, including waste-to-energy operations, maintenance and construction activities. While we have been successful to date in maintaining operations, if significant portions of our workforce were to be unable to work effectively, including because of illness, quarantines, government actions, travel restrictions, facility closures, social distancing requirements or other restrictions in connection with the COVID-19 pandemic, our operations could be materially impacted. It is possible that the continued spread of COVID-19 could also cause further disruption in our supply chains, adversely affect our business partners, delay our construction activities or cause other unpredictable events.

The spread of COVID-19 throughout the U.S., Canada and the UK has forced and may continue to force many of our employees to work from home and may result in employees missing work if they or a member of their family contract COVID-19, which could harm our operations and negatively impact our financial condition. We may also be prevented from receiving goods or services from contractors. While the impacts of COVID-19 did affect our business, including reductions in waste volumes at times and some project delays, we have generally been able to maintain operations and project development activities. Decisions beyond our control, such as canceled events, restricted travel, quarantines, barriers to entry or other factors may affect our ability in the future to operate our waste-to-energy plants and delay ongoing or planned construction projects in the UK, financing activities, and other needs that would normally be accomplished without such limitations. The extent to which the COVID-19 outbreak may, in the future, impact our operations, our business and the economy is highly uncertain; however, a dramatic downturn in commercial activity in the markets in which we operate may reduce the amount of waste available for delivery to our waste-to-energy facilities, adversely impacting revenues from waste processing, metals recovery, and power generation. We cannot predict the future impact of the COVID-19 pandemic, but it may materially and adversely affect our business, financial condition and results of operations.

A long-term decline in our stock price may result in impairment charges.

The COVID-19 pandemic and the resulting impact to the economy have caused global stock price volatility and some companies' stock prices dropped considerably. If there is an extended period of lower stock market valuations or an extended global recession which adversely impacts revenues generated from our waste processing facilities, we may be required to perform additional impairment tests for our goodwill, intangible assets and long-lived assets, which may result in material impairment charges.

24

Table of Contents
Business and Operating Risks

We are subject to risks and uncertainties related to our strategic review which may adversely affect our business and results of operations and financial condition.

On October 29, 2020, we announced a comprehensive strategic review of the Company’s operations, growth priorities, and capital structure. We cannot assure that this strategic review will result in the identification and successful execution of any particular strategies or transactions, and the process of conducting the strategic review will involve the dedication of significant resources and the incurrence of additional costs and expenses. In addition, speculation and uncertainty regarding the strategic review process may cause or result in disruption of our business; distraction of our employees; difficulty in recruiting, hiring, motivating, and retaining talented and skilled personnel; difficulty in maintaining or negotiating and consummating new business or strategic relationships or transactions; and increased stock price volatility. If we are unable to mitigate these or other potential risks related to the uncertainty caused by the strategic review process, it may adversely affect our business or adversely impact our net sales, revenues, operating results of operations, and financial condition.

We may be unable to successfully execute divestitures, which could have adverse financial and accounting impacts, distract management, and give rise to disputes.

We continually assess the strategic fit of our existing assets and businesses and may divest assets or businesses that no longer fit our strategic plans or investment return criteria. These transactions pose risks and challenges that could negatively impact our business and financial condition. We may be unable to divest assets or businesses on satisfactory terms or within planned time frames or at all. Divestitures may dilute our earnings, have other adverse financial and accounting impacts, distract management, and give rise to disputes with buyers, including adverse claims under indemnification obligations in transaction agreements.

We may be unable to identify acquisition opportunities and successfully execute acquisitions and integrations, which could have adverse financial and accounting impacts, distract management, and give rise to disputes.

Our ability to grow revenue, earnings, and free cash flow depends in part on our ability to identify and successfully acquire and integrate businesses and assets at appropriate prices and realize expected growth and synergies. Acquisitions present significant challenges and risks relating to the integration of the business into the company. If we make acquisitions, it could have adverse financial and accounting impacts, such as asset impairment charges related to acquisitions that do not meet expectations, distract management and place a strain on our management systems and infrastructure and resources, as well as present new or different risks to our business. We can provide no assurance that we will continue to identify acquisition opportunities for growth or manage and integrate acquisitions successfully.

Exposure to energy, waste disposal, recycled metal and commodity prices may affect our results of operations.

Some of the electricity and steam we sell and most of the recycled metals we sell, are subject to market price volatility. Changes in the market prices for electricity and steam in particular can be affected by changes in natural gas prices, weather conditions and other market variables, while recycled metals prices are affected by general economic conditions and global demand for construction, goods and services. Similarly, the portion of waste processing capacity which is not under contract may be subject to volatility, principally as a result of general economic activity and waste generation rates, as well as the availability of alternative disposal sites and the cost to transport waste to alternative disposal. Volatility with respect to each of these revenue categories could adversely impact our businesses’ profitability and financial performance. We may not be successful in our efforts to mitigate our exposure to price swings relating to these revenue streams.

We may experience volatility in the market prices and availability of commodities we purchase, such as reagents, chemicals and fuel. Any price increase, delivery disruption or reduction in the availability of such supplies could affect our ability to operate the facilities and impair our cash flow and results of operations. We may not be successful in our efforts to mitigate our exposure to supply and price swings for these commodities.

The energy industry is becoming increasingly competitive, and we might not successfully respond to these changes which could have a material adverse effect on our results of operations and financial condition.

We may not be able to respond in a timely or effective manner to the changes resulting in increased competition in the energy industry in global markets. These changes may include deregulation of the electric utility industry in some markets, privatization of the electric utility industry in other markets and increasing competition in all markets. To the extent competitive
25

Table of Contents
pressures increase and the pricing and sale of electricity assumes more characteristics of a commodity business, the economics of our business may be subject to greater volatility and we might not timely or successfully respond to these changes. If this were to happen and we did not timely and successfully respond, such competitive pressures could have a material adverse impact on our results of operations and financial condition.

Contracts to provide new services or services through new or different methods involves significant risks, which could have an adverse effect on our results of operations and financial condition.

As we enter into contracts to provide new services or services through new or different methods, such as our waste transportation and disposal contract with New York City, new projects under development in the UK, our acquired environmental services businesses, or new facilities for processing metals and/or ash, we may face additional operating risks which could impact our results of operations and financial condition. These may include:

performance by multiple contractors critical to our ability to perform under our new customer agreements;
logistics associated with transportation of waste via barge, rail or other methods with which we have limited experience;
reliance on joint venture parties or technology providers with whom we have limited experience; and
risks associated with providing new materials handling or treatment services.

Operation of our businesses involves significant risks, which could have an adverse effect on our cash flows and results of operations.

The operation of our businesses involves many risks, including:

supply or transportation interruptions;
the breakdown, failure or unplanned maintenance or repair of equipment or processes;
difficulty or inability to find suitable replacement parts for equipment;
the unavailability of sufficient quantities of waste or fuel;
fluctuations in the heating value of the waste we use for fuel at our WtE facilities;
failure or inadequate performance by critical contractors or subcontractors;
disruption in the transmission of electricity generated;
labor disputes and work stoppages;
unforeseen engineering and environmental problems;
unanticipated cost overruns;
weather interferences and catastrophic events including fires, explosions, earthquakes, droughts, pandemics and acts of terrorism; and
the exercise of the power of eminent domain.

We cannot predict the impact of these risks on our business or operations. One or more of these risks, if they were to occur, could prevent us from meeting our obligations under our operating contracts and have an adverse effect on our cash flows and results of operations.

Our results of operations may be adversely affected by market conditions existing at the time our contracts expire.

For the WtE facilities that we own or lease, the contracts pursuant to which we provide waste services and sell energy output expire on various dates between 2021 and 2053. Expiration of these contracts subjects us to greater market risk in entering into new or replacement contracts at pricing levels that may not generate comparable revenue. We cannot assure that we will be able to enter into renewal or replacement contracts on favorable terms, or at all. We also expect that medium- and long-term contracts for sales of energy may be less available than in the past. As a result, after expiration of existing contracts, we expect to sell our energy output either in short-term transactions or on a spot basis or pursuant to new contracts which may subject us to greater market risk in maintaining and enhancing revenue. As a result, following the expiration of our existing medium and long-term contracts, we may have more exposure on a relative basis to market risk, and therefore revenue fluctuations, in energy markets than in waste markets.

Where we have leasehold interests, we cannot assure that market conditions prevailing when such interests expire will allow us to enter into an extension or that the terms available in the market at the time will be favorable to us.
26

Table of Contents

Our revenue and cash flows may decline if we are not successful in retaining rights to operate facilities after our contracts expire or such rights otherwise terminate.

We operate some facilities owned by public sector clients, under long-term contracts. If, when existing contracts expire, we are unable to reach agreement with certain of our municipal clients on terms acceptable to us to extend our operating contracts, this may adversely affect our revenue, cash flow and profitability. We cannot assure that we will be able to enter into such renewal contracts or that the terms available in the market at the time will be favorable to us.

At a limited number of facilities we operate that are owned by public sector clients, our clients have certain rights to terminate such contracts without cause. If any such terminations were to occur, this may adversely affect our revenue, cash flow and profitability. We cannot assure that such contract terminations will not occur in the future.

Development and construction of new projects and expansions may not commence as anticipated, or at all, which could have a material adverse impact on our cash flows and financial condition.

Development and construction involves many risks including:

difficulties in identifying, obtaining and permitting suitable sites for new projects;
the inaccuracy of our assumptions with respect to the cost of and schedule for completing construction;
difficulty, delays or inability to obtain financing for a project on acceptable terms;
delays in deliveries of, or increases in the prices of, equipment sourced from other countries;
the unavailability of sufficient quantities of waste or other fuels for startup;
permitting and other regulatory issues, license revocation and changes in legal requirements;
labor disputes and work stoppages;
unforeseen engineering and environmental problems;
interruption of existing operations; 
unanticipated cost overruns or delays;
weather interferences and catastrophic events including fires, explosions, earthquakes, droughts, pandemics and acts of terrorism; and
reliance on third party contractors for performance.

In addition, new facilities have no operating history and may employ recently developed technology and equipment. A new facility may be unable to fund principal and interest payments under its debt service obligations or may operate at a loss. In certain situations, if a facility fails to achieve commercial operation, at certain levels or at all, termination rights in the agreements governing such facility's financing may be triggered, rendering all of the facility’s debt immediately due and payable. As a result, the facility may be rendered insolvent and we may lose our interest in the facility, which could have a material adverse impact on our cash flows and financial condition.

Construction activities may cost more and take longer than we estimate.

The design and construction of new projects or expansions requires us to contract for services from engineering and construction firms, and make substantial purchases of equipment such as boilers, turbine generators and other components that require large quantities of steel to fabricate. These are complex projects that include many factors and conditions which may adversely affect our ability to successfully compete for new projects, or construct and complete such projects on time and within budget.

Our revenue and cash flows may be subject to greater volatility if we extend or renew our contracts under tip fee structures more often than service fee structures.

Our revenue and cash flows may be subject to greater volatility if we extend or renew our contracts under tip fee structures more often than under service fee structures. Due to the nature of tip fee structures, if that were to occur, we may be exposed to greater performance and price risk on the waste that we process and the energy that we sell.

27

Table of Contents
Our Tip Fee WtE projects involve greater risk of exposure to performance levels which, if not satisfied, could result in materially lower revenue.

At our WtE facilities where tip fee structures exist, we receive 100% of the energy revenue they generate. As a result, if we are unable to operate these facilities at their historical performance levels for any reason, our revenue from energy sales could materially decrease.

We depend on our senior management and key personnel and we may have difficulty attracting and retaining qualified professionals which could adversely affect our business and financial condition.

Our future operating results depend to a large extent upon the continued contributions of key senior managers and personnel. In addition, we are dependent on our ability to attract, train, retain and motivate highly skilled employees. There is significant competition for employees with the requisite level of experience and qualifications. If we cannot attract, train, retain and motivate qualified personnel, we may be unable to compete effectively and our growth may be limited, which could have a material adverse effect on our business, results of operations, financial condition and prospects.

Changes in technology may have a material adverse effect on our profitability.

Traditional waste streams are a critical resource for our business. Research and development activities are ongoing to provide alternative and more efficient technologies to manage waste, produce or extract by-products from waste, or to produce power. We and many other companies are pursuing these technologies, and capital is being invested to find new approaches to waste management, waste treatment, and renewable power generation. It is possible that this deployment of capital may lead to advances in these or other technologies which will reduce the cost of waste management or power production to a level below our costs and/or provide new or alternative methods of waste management or energy generation that become more accepted than those we currently utilize. Unless we are able to participate in these advances and therefore continue to successfully compete in our markets, such changes could have a material adverse effect on our revenue, profitability and the value of our existing facilities.

Our ability to optimize our operations depends in part on our ability to compete for and obtain solid waste for fuel for our facilities, and our failure to do so may adversely affect our financial results.

Our WtE facilities depend on solid waste for fuel, which provides a source of revenue. For some of our WtE facilities, the availability of solid waste to us, as well as the tipping fee that we charge to attract solid waste to our facilities, is impacted by competition from a number of sources such as other WtE facilities, landfills and transfer stations competing for waste in the market area. In addition, as our long-term contracts expire at our owned facilities, we may need to obtain waste at new market competitive prices, which could decrease our revenue. There has been consolidation, and there may be further consolidation, in the solid waste industry that would reduce the number of solid waste collectors or haulers that are competing for disposal facilities or enable such collectors or haulers to use wholesale purchasing to negotiate favorable below-market rates. The consolidation in the solid waste industry has resulted in companies with vertically integrated collection activities and disposal facilities. Such consolidation may result in economies of scale for those companies, as well as the use of disposal capacity at facilities owned by such companies or by affiliated companies. Such activities can affect both the availability of waste to us for processing at some of our WtE facilities and market pricing, which could have a material adverse effect on our results of operations.

Our ability to successfully manage organizational, process and cost-efficiency initiatives could strain our resources and adversely affect our profitability.

We have made and expect to continue to undertake organizational, process and cost efficiency changes intended to improve our business. These changes, which may include implementation of new systems and processes, staff adjustments and reassignments of responsibilities, are important to our business success. Failure or delay in implementing these actions, or ineffective implementation could strain our resources and systems, resulting in disruption to our business and/or adversely affecting our results.

Our waste operations are concentrated in one region and expose us to regional economic or market declines.

The majority of our waste disposal facilities are located in the northeastern U.S., primarily along the Washington, D.C. to Boston, Massachusetts corridor. Adverse economic developments in this region could affect regional waste generation rates and demand for waste management services provided by us. Adverse market developments caused by additional waste processing
28

Table of Contents
capacity in this region could adversely affect waste disposal pricing. Either of these developments could have a material adverse effect on our profitability and cash generation.

Exposure to international economic and political factors may have a material adverse effect on our international businesses.

Our international operations expose us to political, legal, tax, currency, inflation, convertibility and repatriation risks, as well as potential constraints on the development and operation of potential business, any of which can limit the benefits to us from international projects.

The financing, development, construction and operation of projects outside the U.S. can entail significant political and financial risks, which vary by country, including:

changes in law or regulations;
changes in electricity pricing;
changes in foreign tax laws and regulations;
changes in U.S. federal, state and local laws, including tax laws, related to foreign operations;
compliance with, and potential penalties resulting from non-compliance with, applicable domestic and foreign corrupt practices laws;
changes in government policies or personnel;
changes in general economic conditions affecting each country, including conditions in financial markets;
changes in treaties among countries affecting importation of equipment or movement of people across borders;
changes in labor relations in operations outside the U.S.;
political, economic or military instability and civil unrest;
expropriation and confiscation of assets and facilities; and
credit quality of entities that pay for our services or purchase our power.

The legal and financial environment in foreign countries in which we currently own assets or projects could also make it more difficult for us to enforce our rights under agreements relating to such projects.

Any or all of the risks identified above with respect to our international projects could adversely affect our projected costs, profitability and cash generation. As a result, these risks may have a material adverse effect on our business, consolidated financial condition and results of operations.

Our ability to execute on our new project pipeline in the United Kingdom may be disrupted by Brexit.

Notwithstanding the trade deal reached with the EU on December 24, 2020, there currently remains substantial uncertainty regarding whether any agreements negotiated as part of Brexit will have an adverse impact on the UK economy. Depending on a variety of factors, which we are currently unable to predict, Brexit could have adverse consequences on our ability to implement our development plans in the UK. Potential impacts of Brexit on our UK development plans could include (i) disruptions in our ability to access the debt markets on favorable terms to finance our pipeline of new WtE projects in the UK, (ii) increases in our construction costs (or potential construction delays) where that construction requires importing equipment or materials or use of non-UK labor resource, (iii) decreases in the value of our operating investments because of a devaluation of the British pound against other currencies, and (iv) other adverse consequences that we cannot presently predict because of material uncertainties regarding the precise impact and results of the execution of Brexit.

Changes in climate conditions could materially affect our business and prospects.

Significant changes in weather patterns and volatility could have a negative influence on our existing business and our prospects for growing our business. Such changes may cause episodic events (such as hurricanes, floods or storms) that are difficult to predict or prepare for, or longer-term trends (such as droughts or sea-level rise). These or other meteorological changes could lead to damages to our facilities, increased operating costs, capital expense, disruptions in facility operations or supply chains, changes in waste generation and interruptions in waste deliveries, limited availability of water for plant cooling operations, and changes in energy pricing, among other effects. We cannot quantify in advance the impact if such events were to occur, but, depending on the size of their impact, they could materially adversely impact our financial condition and results of operations. 

29

Table of Contents
Risks Related to Information Systems Security

Our information systems, and those of our third-party service providers and vendors, are vulnerable to an increasing threat of continually evolving cybersecurity risks. These risks may take the form of malware, computer viruses, cyber threats, extortion, employee error, malfeasance, system errors or other types of risks, and may occur from inside or outside of our organization. Cybersecurity risk is increasingly difficult to identify and quantify and cannot be fully mitigated because of the rapidly evolving nature of the threats, targets and consequences. Additionally, unauthorized parties may attempt to gain access to these systems or our information through fraud or other means of deceiving our third-party service providers, employees or vendors. Our operations depend, in part, on how well we and our suppliers protect networks, equipment, information technology (“IT”) systems and software against damage from a number of threats. We have entered into agreements with third parties for hardware, software, telecommunications and other services in connection with our operations. Our operations depend on the timely maintenance, upgrade and replacement of our and our vendors' networks, equipment, IT systems and software. However, if we or our vendors are unable to or delayed in maintaining, upgrading or replacing IT systems and software, the risk of a cybersecurity incident could materially increase. Any of these and other events could result in information system failures, delays and/or increases in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact our reputation and results of operations.

In addition, targeted attacks on our systems (or on systems of third parties that we rely on), failure or non-availability of a key IT system or a breach of security measures designed to protect our IT systems could result in disruptions to our operations through delays or the corruption and destruction of our data, personal injury, property damage, loss of confidential information or financial or reputational risks. As the threat landscape is ever-changing, we must make continuous mitigation efforts, including: risk prioritized controls to protect against known and emerging threats; tools to provide automated monitoring and alerting; and backup and recovery systems to restore systems and return to normal operations. However, there can be no assurance that our ability to monitor for or mitigate cybersecurity risks will be fully effective, and we may fail to identify cybersecurity breaches or discover them in a timely way.

Any significant compromise or breach of our data security, whether external or internal, or misuse of data, could result in significant costs, lost sales, fines and lawsuits, as well as damage to our reputation. In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could also result in additional costs. As cyber threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

Concentration of suppliers and customers may expose us to heightened financial risk.

Our waste and energy services businesses often rely heavily on a single supplier or single customer at our facilities, exposing such facilities to financial risks if one of these suppliers or customers should fail to perform its obligations.

For example, our businesses often rely on a single supplier to provide waste, fuel, water and other services required to operate a facility and on a single customer or a few customers to purchase all or a significant portion of a facility’s output. The financial performance of these facilities depends on such customers and suppliers continuing to perform their obligations under their long-term agreements. A facility’s financial results could be materially and adversely affected if any one customer or supplier fails to fulfill its contractual obligations and we are unable to find other customers or suppliers to produce the same level of profitability. We cannot provide assurances that such performance failures by third parties will not occur, or that if they do occur, such failures will not have a material adverse effect on the cash flows or profitability of our businesses.

In addition, we rely on the public sector clients as a source not only of waste for fuel, but also of revenue from the fees for waste services we provide. Because our contracts with public sector clients are generally long-term, we may be adversely affected if the credit quality of one or more of our public sector clients were to decline materially.

30

Table of Contents
Financial and Liquidity Risks

Our substantial indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations under our indebtedness.

As of December 31, 2020, we had $2.5 billion of total consolidated indebtedness. The level of our consolidated indebtedness could have significant consequences on our future operations, including:

making it difficult for us to meet our payment and other obligations under our outstanding indebtedness;
limiting our ability to obtain additional financing to fund working capital, capital expenditures, new projects, acquisitions and other general corporate purposes;
subjecting us to the risk of increased sensitivity to interest rate increases on indebtedness under our credit facilities;
limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate and the general economy; and
placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged.

Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations under our consolidated debt, and the price of our common stock.

The inability of our cash flow from operations to service our indebtedness could have a material adverse effect on our financial condition.

We cannot guarantee that our business will generate sufficient cash flow from operations, or that sufficient future borrowings will be available to us under our credit facilities or otherwise, to enable us to meet our payment obligations under our outstanding indebtedness and to fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under our outstanding indebtedness, which could have a material adverse effect on our financial condition.

Our ability to meet our obligations under our indebtedness depends on our ability to receive dividends and distributions from our subsidiaries in the future. This, in turn, is subject to many factors, some of which are beyond our control, including the following:

the continued operation and maintenance of our facilities, consistent with historical performance levels;
maintenance or enhancement of revenue from renewals or replacement of existing contracts and from new contracts to expand existing facilities or operate additional facilities;
market conditions affecting waste disposal and energy pricing, as well as competition from other companies for contract renewals, expansions and additional contracts, particularly after our existing contracts expire;
the continued availability of the benefits of our net operating loss carryforwards; and
general economic, financial, competitive, legislative, regulatory and other factors.

Our credit facilities and the indentures for our other corporate debt contain covenant restrictions that may limit our ability to operate our business.

Our credit facilities and the indentures for our other corporate debt contain operating and financial restrictions and covenants that impose operating and financial restrictions on us and require us to meet certain financial tests. Complying with these covenant restrictions may limit our ability to engage in certain transactions or activities, including incurring additional indebtedness, making certain investments and distributions, and selling certain assets.

As a result of these covenant restrictions, our ability to respond to changes in business and economic conditions and to obtain additional financing, if needed, may be restricted, and we may be prevented from engaging in transactions that might otherwise be beneficial to us.

31

Table of Contents
Our ability to comply with these covenants is dependent on our future performance, which will be subject to many factors, some of which are beyond our control, including prevailing economic conditions. In addition, the failure to comply with these covenants may result in a default under our credit facilities and other corporate debt. Upon the occurrence of such an event of default, the lenders under our credit facilities could elect to declare all amounts outstanding under such credit facilities, together with accrued interest, to be immediately due and payable. If the lenders accelerate the payment of the indebtedness under our credit facilities, they would trigger a cross-default on most, if not all, of our other corporate debt, and we cannot assure that we would have sufficient assets to repay the indebtedness in full, which could have a material adverse effect on our financial condition.

Dislocations in credit and capital markets and increased capital constraints on banks may make it more difficult for us to borrow money or raise capital needed to finance the construction of new projects, expand existing projects, acquire certain businesses and refinance our existing debt.

Our business is capital intensive, and we seek to finance a significant portion of our existing assets, as well as our investments in new assets, with debt capital to the extent that we believe such financing is prudent.

As of December 31, 2020, we had approximately $2.5 billion in long-term debt and project debt outstanding. Prolonged instability or deterioration in the bank credit and/or debt and equity capital markets may adversely affect our ability to obtain refinancing of our existing debt on favorable terms, or at all. Such circumstances could adversely affect our business, financial condition, and/or the share price of our common stock.

Our businesses generate their revenue primarily under long-term contracts and must avoid defaults under those contracts in order to service their debt and avoid material liability to contract counterparties.

We must satisfy performance and other obligations under contracts governing WtE facilities. These contracts typically require us to meet certain performance criteria relating to amounts of waste processed, energy generation rates per ton of waste processed, residue quantity and environmental standards. Our failure to satisfy these criteria may subject us to termination of operating contracts. If such a termination were to occur, we would lose the cash flow related to the projects and incur material termination damage liability, which may be guaranteed by us. In circumstances where the contract has been terminated due to our default, we may not have sufficient sources of cash to pay such damages. We cannot assure that we will be able to continue to perform our respective obligations under such contracts in order to avoid such contract terminations, or damages related to any such contract termination, or that if we could not avoid such terminations that we would have the cash resources to pay amounts that may then become due.

We have provided guarantees and financial support in connection with our projects.

We are frequently obligated to guarantee or provide financial support for our projects in one or more of the following forms:

support agreements in connection with construction, service or operating agreement-related obligations;
direct guarantees of certain debt relating to our facilities or investments;
contingent obligations to pay lease payment installments in connection with certain of our facilities;
agreements to arrange financing for projects under development;
contingent credit support for damages arising from performance failures;
environmental indemnities; and
contingent capital and credit support to finance costs, in most cases in connection with a corresponding increase in service fees, relating to uncontrollable circumstances.

Many of these contingent obligations cannot readily be quantified, but, if we were required to provide this support, it could have a material adverse effect on our cash flow, results of operations and financial condition.

32

Table of Contents
Our businesses depend on performance by third parties under contractual arrangements.

Our waste and energy services businesses depend on a limited number of third parties to, among other things, purchase the electric and steam energy produced by our facilities, supply and deliver the waste and other goods and services necessary for the operation of our energy facilities, and purchase the metals we recover. The viability of our facilities depends significantly upon the performance by third parties in accordance with our contracts, and such performance depends on factors which may be beyond our control. If those third parties do not perform their obligations, or are excused from performing their obligations because of nonperformance by our waste and energy services businesses or other parties to the contracts, or due to force majeure events or changes in laws or regulations, our businesses may not be able to secure alternate arrangements on substantially the same terms, or at all. In addition, the bankruptcy or financial stability of third parties with whom we do business could result in nonpayment or nonperformance of that party’s obligations to us.

We are subject to counterparty and market risk with respect to transactions with financial and other institutions.

Following the expiration of our initial contracts to sell electricity from our projects, we expect to have on a relative basis more exposure to market risk, and therefore revenue fluctuations, in energy markets than in waste markets. Consequently, we may enter into futures, forward contracts, swaps or options with financial institutions to hedge our exposure to market risk in energy markets. We can provide no assurances as to the financial stability or viability of these financial and other institutions.

Future impairment charges could have a material adverse effect on our financial condition and results of operations.

In accordance with accounting guidance, we evaluate long-lived assets and goodwill for impairment on an annual basis and whenever events or changes in circumstances, such as significant adverse changes in regulation, business climate or market conditions, could potentially indicate the carrying amount may not be recoverable. Significant reductions in our expected revenue or cash flows for an extended period of time resulting from such events could result in future asset impairment charges, which could have a material adverse impact on our financial condition and results of operations.

We cannot be certain that our net operating loss carryforwards (“NOLs”) will continue to be available to offset our federal tax liability.

As of December 31, 2020, we had $239 million of NOLs. NOLs offset our consolidated taxable income and $189 million will expire in various amounts, if not used, between 2033 and 2037 (the remainder has no expiration date). The NOLs are also used to offset income from certain grantor trusts that were established as part of the reorganization in 1990 of certain of our subsidiaries engaged in the insurance business and are administered by state regulatory agencies. As the administration of these grantor trusts concludes, taxable income could result, utilizing a portion of our NOLs and accelerating the date on which we may be otherwise obligated to pay incremental cash taxes.

Our insurance and contractual protections may not always cover lost revenue, increased expenses or contractual liabilities.

Although our businesses maintain insurance, obtain warranties from vendors, require contractors to meet certain performance levels and, in some cases, pass risks we cannot control to the service recipient or output purchaser, the proceeds of such insurance, warranties, performance guarantees or risk sharing arrangements may not be adequate to cover lost revenue, increased expense or contractual liabilities. If that were to occur, it could materially adversely impact our financial conditions and results of operations.

Provisions of our certificate of incorporation, our credit facilities and our other corporate debt could discourage an acquisition of us by a third party.

Certain provisions of our credit facilities and our other corporate debt could make it more difficult or more expensive for a third party to acquire us. Upon the occurrence of certain transactions constituting a fundamental change, holders of our credit facilities and our other corporate debt will have the right to require Covanta Holding or Covanta Energy, as the case may be, to repurchase their corporate debt or repay the facilities, as applicable. In addition, provisions of our certificate of incorporation and bylaws, each as amended, could make it more difficult for a third party to acquire control of us. For example, our certificate of incorporation authorizes our board of directors to issue preferred stock without requiring any stockholder approval, and preferred stock could be issued as a defensive measure in response to a takeover proposal. All these provisions could make it more difficult for a third party to acquire us or discourage a third party from acquiring us even if an acquisition might be in the best interest of our stockholders.

33

Table of Contents
Legal and Regulatory Risks

Compliance with environmental laws, including changes to such laws, could adversely affect our results of operations and financial condition.

Our businesses are subject to extensive environmental laws and regulations by federal, state, local and foreign authorities, primarily relating to air, waste (including residual ash from combustion) and water. Costs relating to compliance with these laws and regulations are material to our business. If our businesses fail to comply with these regulations, our operations could be disrupted, our cash flow and profitability could be adversely affected, and we could be subject to civil or criminal liability, damages and fines.

In addition, lawsuits or enforcement actions by federal, state, local and/or foreign regulatory agencies may materially increase our costs. Stricter environmental regulation of air emissions, solid waste handling or combustion, residual ash handling and disposal, and waste water discharge could materially affect our cash flow and profitability. Certain environmental laws make us potentially liable on a joint and several basis for the remediation of contamination at or emanating from properties or facilities we currently or formerly owned or operated or properties to which we arranged for the disposal of hazardous substances. Such liability is not limited to the cleanup of contamination we actually caused. We cannot provide any assurance that we will not incur liability relating to the remediation of contamination, including contamination we did not cause. For additional information on environmental regulation, see Item 1. Business — Regulation of Business.

Existing environmental laws and regulations have been and could be revised or reinterpreted, and future changes in environmental laws and regulations are expected to occur. This may materially increase the amount we must invest to bring our facilities into compliance, impose additional expense on our operations, limit our ability to operate at capacity, or at all, or otherwise impose structural changes to markets which would adversely affect our competitive positioning in those markets.

Significant policy shifts from a new administration could have a material adverse effect on us.

The Trump Administration made substantial changes in the areas of fiscal and tax policy, regulatory oversight of businesses, and restrictions on free trade, including significant increases in tariffs on goods imported into the U.S., particularly from China. Positions taken by the new Biden Administration and its rejection of Trump Administration policies could result in changes to social, political, regulatory and economic conditions in the U.S. or in laws and policies affecting investment in countries where we currently conduct business. In addition, these changes could result in additional costs associated with growing our international business. We cannot predict the impact, if any, of these changes to our business. However, it is possible that these changes could adversely affect our business. It is likely that while some policies adopted by the new Biden administration will benefit us, others will negatively affect us.

Changes in public policies and legislative initiatives relating to climate change, greenhouse gas regulation, and environmental justice could materially affect our business and prospects.

There has been substantial debate recently in the U.S. and abroad regarding environmental and energy policies affecting climate change, the outcome of which could have a positive or negative influence on our existing business and our prospects for growing our business. Congress and several states have considered legislation and/or regulations designed to increase the proportion of the nation’s electricity that is generated from technologies considered “clean” or “renewable”, through mandatory generation levels, tax incentives, and other means. For those sources of green-house-gas "GHG" emissions that are unable to meet the required limitations, such legislation could impose substantial financial burdens. The Biden administration has indicated that it generally favors renewable energy technologies. Our business and future prospects could be adversely affected if renewable technologies we use were either (i) disfavored in any new laws or regulations pursued by the Biden administration, or (ii) not included among those technologies identified in any final laws or regulations as favoring renewable technologies, or not included in the state plans to reduce carbon emissions, and therefore not entitled to the benefits of such laws, regulations, or plans.

As recent events have brought a focus to social justice in our society, they have also revitalized the discussion in our cities about environmental justice. Addressing environmental stressors in socioeconomically disadvantaged neighborhoods is the subject of legislation and regulation in many states and a number of our facilities are located in socially disadvantaged neighborhoods. We cannot predict at this time the impact to our business but if our facilities are unable to operate it could adversely affect our revenues, financial condition and materially affect our business prospects.



34

Table of Contents
Our reputation could be adversely affected if we are unable to operate our business in compliance with laws, or if our efforts to grow our business results in adverse publicity.

If we encounter regulatory compliance issues in the course of operating our businesses, we may experience adverse publicity, which may intensify if such non-compliance results in civil or criminal liability. This adverse publicity may harm our reputation, and result in difficulties in attracting new customers, or retaining existing customers.

With respect to our efforts to grow and maintain our business globally, we sometimes experience opposition from advocacy groups or others intended to halt our development or on-going business. Such opposition is often intended to discourage third parties from doing business with us and may be based on misleading, inaccurate, incomplete or inflammatory assertions. Our reputation may be adversely affected as a result of adverse publicity resulting from such opposition. Such damage to our reputation could adversely affect our ability to grow and maintain our business.

Our reputation could be adversely affected if our businesses, or third parties with whom we have a relationship, were to fail to comply with U.S. or foreign anti-corruption laws or regulations.

Some of our projects and new business may be conducted in countries where corruption has historically penetrated the economy to a greater extent than in the U.S. It is our policy to comply, and to require our local partners and those with whom we do business to comply, with all applicable anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act and the UK Bribery Act, and with applicable local laws of the foreign countries in which we operate. Our reputation may be adversely affected if we were reported to be associated with corrupt practices or if we or our local partners failed to comply with such laws. Such damage to our reputation could adversely affect our ability to grow our business.

Energy regulation could adversely affect our revenue and costs of operations.

Our waste and energy services businesses are subject to extensive energy regulations by federal, state and foreign authorities. We cannot predict whether the federal, state or foreign governments will modify or adopt new legislation or regulations relating to the solid waste or energy industries. The economics, including the costs, of operating our facilities may be adversely affected by any changes in these regulations or in their interpretation or implementation or any future inability to comply with existing or future regulations or requirements.

If our businesses lose existing exemptions under the Federal Power Act, the economics and operations of our energy projects could be adversely affected, including as a result of rate regulation by the Federal Energy Regulatory Commission with respect to our output of electricity, which could result in lower prices for sales of electricity and increased compliance costs. In addition, depending on the terms of the project’s power purchase agreement, a loss of our exemptions could allow the power purchaser to cease taking and paying for electricity under existing contracts. Additionally, as a result of recent changes promulgated by the Federal Energy Regulatory Commission, where possible states may choose to make utilities pay variable energy rates for the output of our facilities, as opposed to the fixed rates that they have previously enjoyed. Such results could cause the loss of some or all contract revenue or otherwise impair the value of a project and could trigger defaults under provisions of the applicable project contracts and financing agreements. Defaults under such financing agreements could render the underlying debt immediately due and payable. Under such circumstances, we cannot assure that revenue received, the costs incurred, or both, in connection with the project could be recovered through sales to other purchasers.

Failure to obtain regulatory approvals could adversely affect our operations.

Our waste and energy services businesses are continually in the process of obtaining or renewing federal, state, local and foreign approvals required to operate our facilities. We may not always be able to obtain all required regulatory approvals, and we may not be able to obtain any necessary modifications to existing regulatory approvals or maintain all required regulatory approvals. If there is a delay in obtaining any required regulatory approvals or if we fail to obtain and comply with any required regulatory approvals, the operation of our facilities or the sale of electricity to third parties could be prevented, made subject to additional regulation or subject our businesses to additional costs or a decrease in revenue. Any of these events, if they were to occur, could result in a material adverse effect to our financial condition and results of operations.
35

Table of Contents
General Risks

Weakness in the economy may have an adverse effect on our revenue, cash flow and our ability to grow our business.

Our business is directly affected by economic slowdowns and general reduction in demand for goods and services. A weak economy generally results in reduced overall demand for waste disposal, recycled metal and energy production. Under such conditions, the pricing we are able to charge for our waste management services, and for our energy and recycled metals, may decline and/or experience increased volatility. In addition, many of our customers are municipalities and other public sector entities which may be adversely affected in an economic downturn due to reduced tax revenue. Consequently, some of these entities could be unable to pay amounts owed to us or renew contracts with us for similar volumes or at previous or increased rates.

Furthermore, lower prices for waste disposal and energy production, particularly in the absence of energy policies which encourage renewable technologies such as WtE, may also make it more difficult for us to sell waste and energy services at prices sufficient to allow us to grow our business through developing and building new projects. These factors could have a material adverse effect on our revenues, cash flow and profitability.

Exposure to foreign currency fluctuations may affect our results from operations or construction costs of facilities we develop in international markets.

We have sought to participate in projects where the host country has allowed the convertibility of its currency into U.S. dollars and repatriation of earnings, capital and profits subject to compliance with local regulatory requirements. As and if we grow our business in other countries and enter new international markets, we expect to invest substantial amounts in foreign currencies to pay for the construction costs of facilities we develop, or for the cost to acquire existing businesses or assets. Currency volatility in those markets, as well as the effectiveness of any currency hedging strategies we may implement, may impact the amount we are required to invest in new projects, as well as our reported results.

Our controls and procedures may not prevent or detect all errors or acts of fraud.

Any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must consider the benefits of controls relative to their costs. Inherent limitations within a control system include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. While the design of any system of controls is to provide reasonable assurance of the effectiveness of disclosure controls, such design is also based in part upon certain assumptions about the likelihood of future events, and such assumptions, while reasonable, may not take into account all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and may not be prevented or detected.

Failure to maintain an effective system of internal controls over financial reporting may have an adverse effect on our stock price.

We have in the past discovered, and may potentially in the future discover, areas of internal control over financial reporting that may require improvement. Whenever such a control deficiency is determined to exist, we could incur significant costs in remediation efforts implementing measures designed to ensure that the control deficiencies contributing to a material weakness are remediated. If we are unable to assert that our internal control over financial reporting is effective now or in any future period, whether as a result of a newly- determined deficiency or because remediation efforts are ongoing, or if our independent auditors are unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our stock price.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

36

Table of Contents
Item 2. PROPERTIES

As of December 31, 2020, we owned, had equity investments in and/or operated 82 facilities, consisting of 41 WtE operations, 13 transfer stations, 20 material processing facilities, four landfills (primarily for ash disposal), two wood waste (biomass) energy projects, one regional metals recycling facility and one ash processing facility (currently in start-up and testing phase).

Projects that we own or lease are conducted at properties, which we also own or lease, aggregating approximately 1,035 acres, of which 670 acres are owned and 365 acres are leased. We lease approximately 104,000 square feet for our headquarters in Morristown, New Jersey. We operate projects outside of North America through our equity method investments and have offices located in Dublin, Ireland, UK and China. Our principal projects are described above under Item 1. Business.

Item 3. LEGAL PROCEEDINGS

For information regarding legal proceedings, see Item 8. Financial Statements And Supplementary Data — Note 18. Commitments and Contingencies, which information is incorporated herein by reference. For the disclosure of environmental proceedings with a governmental entity as a party pursuant to Item 103(c)(3)(iii) of Regulation S-K, we have elected to disclose matters where we reasonably believe such proceeding would result in monetary sanctions, exclusive of interest and costs, of $1 million or more.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.
37

Table of Contents
PART II
Item 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the New York Stock Exchange under the symbol “CVA”. On February 12, 2021, there were approximately 583 holders of record of our common stock.

Share Repurchases

Under our share repurchase program, common stock repurchases may be made in the open market, in privately negotiated transactions from time to time, or by other available methods, at management’s discretion in accordance with applicable federal securities laws. The timing and amounts of any repurchases will depend on many factors, including our capital structure, the market price of our common stock and overall market conditions, and whether any restrictions then exist under our policies relating to trading in compliance with securities laws. As of December 31, 2020, the amount remaining under our currently authorized share repurchase program was $66 million. There were no repurchases made under our share repurchase program during the year ended December 31, 2020.

Performance Measurement Comparison

The following performance graph sets forth a comparison of the yearly percentage change our cumulative total stockholder return on common stock with the Standard and Poor’s Midcap 400 Index*, the Dow Jones U.S. Conventional Electricity Index**, and the Dow Jones U.S. Waste & Disposal Services Index**. The foregoing cumulative total returns are computed assuming (a) an initial investment of $100, and (b) the reinvestment of dividends at the frequency which dividends were paid during the applicable years. The graph below reflects comparative information for the five fiscal years beginning with the close of trading on December 31, 2015 and ending December 31, 2020.

cva-20201231_g1.jpg
The stockholder return reflected above is not necessarily indicative of future performance.

* The Standard and Poor’s Midcap 400 Index is a capitalization-weighted index designed to measure performance of the broad domestic economy through changes in the aggregate market value of the component stocks representing all major industries.
** The Dow Jones U.S. Waste & Disposal Services Index and the Dow Jones U.S. Conventional Electricity Index are maintained by Dow Jones & Company, Inc. As described by Dow Jones, the Dow Jones U.S. Waste & Services Index consists of providers of pollution control and environmental services for the management, recovery and disposal of solid and hazardous waste materials, such as landfills and recycling centers. The Dow Jones U.S. Conventional Electricity Index consists of companies generating and distributing electricity through the burning of fossil fuels such as coal, petroleum and natural gas, and through nuclear energy.

Item 6. RESERVED
38

Table of Contents
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The terms “we,” “our,” “ours,” “us,” “Covanta” and “Company” refer to Covanta Holding Corporation and its subsidiaries; the term “Covanta Energy” refers to our subsidiary Covanta Energy, LLC and its subsidiaries.

OVERVIEW

The following discussion should be read in conjunction with our audited consolidated financial statements and the notes thereto included elsewhere in Item 8. Financial Statements and Supplementary Data of this Form 10-K. This discussion may contain forward-looking statements that anticipate results that are subject to uncertainty. We discuss in more detail various factors that could cause actual results to differ from expectations in Item 1A. Risk Factors in this Form 10-K.

For a discussion of our facilities, the WtE process and the environmental benefits of WtE, see Item 1. Business.

We have one reportable segment which is comprised of our entire operating business. For additional information on our reportable segment, see Item 8. Financial Statements and Supplementary Data — Note 1. Organization and Summary of Significant Accounting Policies.

For additional information, see Item 1. Business — Strategy.

General Business Conditions

See Item 1. Business — Markets, Competition and Business Conditions for a discussion of factors affecting business conditions and financial results.

RESULTS OF OPERATIONS

The comparability of the information provided below with respect to our revenue, expense and certain other items for periods during each of the years presented was affected by several factors. As outlined in Item 1. Business — Recent Business Developments, Item 8. Financial Statements And Supplementary Data — Note 1. Organization and Summary of Significant Accounting Policies, Note 3. New Business and Asset Management and Note 4. Dispositions and Assets Held for Sale, our business development initiatives and acquisitions resulted in various transactions, which are reflected in comparative revenue and expense. In addition, comparability of our results was affected by the COVID-19 pandemic as discussed above under Impact of COVID-19 on the U.S. and the global economy. These factors must be taken into account in developing meaningful comparisons between the periods compared below.

The Results of Operations discussion below compares our revenue, expense and certain other items for the years ended December 31, 2020 and 2019. For a discussion of the results for the years ended December 31, 2019 and 2018, please refer to Part II — Item 7. Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2019.

The following terms used within the Results of Operations discussion are defined as follows:

“Organic growth”: reflects the performance of the business on a comparable period-over-period basis, excluding the impacts of transactions and contract transitions.
“Transactions”: includes the impacts of acquisitions, divestitures, and the addition or loss of operating contracts.
“Contract transitions”: includes the impact of the expiration of: (a) long-term major waste and service contracts, most typically representing the transition to a new contract structure, and (b) long-term energy contracts.
39

Table of Contents
RESULTS OF OPERATIONS — OPERATING INCOME

Year Ended December 31, 2020 vs. Year Ended December 31, 2019
 Year Ended December 31,Variance
Increase (Decrease)
202020192020 vs 2019
(In millions)
OPERATING REVENUE:
Waste and service revenue$1,412 $1,393 $19 
Energy revenue357 329 28 
Recycled metals revenue81 86 (5)
Other operating revenue54 62 (8)
Total operating revenue1,904 1,870 34 
OPERATING EXPENSE:
Plant operating expense1,420 1,371 49 
Other operating expense52 64 (12)
General and administrative expense
120 122 (2)
Depreciation and amortization expense224 221 
Impairment charges
19 17 
Total operating expense1,835 1,780 55 
Operating income$69 $90 $(21)

Operating Revenue

Waste and Service Revenue
Year Ended December 31,Variance
(In millions)202020192020 vs 2019
WtE tip fees$651 $638 $13 
WtE service fees466 466 — 
Environmental services136 140 (4)
Municipal services242 231 11 
Other revenue 37 34 
Intercompany(120)(116)(4)
Total waste and service revenue $1,412 $1,393 $19 

Year Ended December 31,Variance
WtE facilities - Tons (1) (In millions)
202020192020 vs 2019
Tip fee - contracted8.78.8(0.1)
Tip fee - uncontracted2.1 2.0 0.1 
Service fee 10.410.7(0.3)
Total Tons21.121.5(0.4)
(1) Includes solid tons only.
Certain amounts may not total due to rounding.

For the twelve month comparative period, waste and service revenue increased $19 million, driven by $20 million in organic growth. Within organic growth, WtE tip fee revenue increased by $16 million due to higher average revenue per ton. Additionally within organic growth, municipal services increased by $9 million and was partially offset by lower environmental services of $4 million.

40

Table of Contents
Energy Revenue
Year Ended December 31,Variance
Increase (Decrease)
202020192020 vs 2019
(In millions)
Revenue (2)
Volume (2) (3)
Revenue (2)
Volume (2) (3)
RevenueVolume
Energy sales (1)
$266 $273 $(7)
Capacity41 44 (3)
Other revenue51 12 39 
Total energy$357 6.5 $329 6.4 $28 0.1 
(1) Includes non-energy portion of wholesale load serving.
(2) Covanta share only. Represents the sale of electricity and steam based upon output delivered and capacity provided.
(3) Steam converted to MWh at an assumed average rate of 11 klbs of steam / MWh.
Certain amounts may not total due to rounding.

For the twelve month comparative period, energy revenue increased by $28 million, primarily driven by $31 million of new wholesale load serving revenue and $9 million of bundled REC revenue, partially offset by lower market prices of $9 million and lower WtE capacity sales of $3 million.

Recycled Metal Revenue
Year Ended December 31,
202020192020201920202019
Metal Revenue
(In millions)
Tons Sold
(In thousands)
(1)
Tons Recovered
(In thousands)
Ferrous Metal$47 $46 402 370 457 424 
Non-Ferrous Metal34 40 32 34 48 51 
Total$81 $86 
(1) Represents the portion of total volume that is equivalent to Covanta’s share of revenue under applicable client revenue sharing arrangements.

For the twelve month comparative period, recycled metals revenue decreased by $5 million, driven by a $7 million decrease in pricing for ferrous and non-ferrous material, partially offset by a $2 million increase in tons sold.

Other Operating Revenue

Other operating revenue decreased by $8 million for the twelve month comparative period, primarily due to lower construction revenue.

Operating Expense

Plant Operating Expense
Year Ended December 31,Variance
(In millions)202020192020 vs 2019
Plant maintenance (1)
$326 $308 $18 
All other1,094 1,063 31 
Plant operating expense$1,420 $1,371 $49 
(1) Plant maintenance costs include our internal maintenance team and non-facility employee costs for facility scheduled and unscheduled maintenance and repair expense.
Certain amounts may not total due to rounding.

Plant operating expenses increased by $49 million for the twelve month comparative period, with $57 million of higher costs in existing operations and $6 million of cost increases related to contract transitions, partially offset by a decrease of $13 million as a result of divestitures. The increase within existing operations was primarily driven by additional costs related to new
41

Table of Contents
wholesale load serving contracts of $28 million, higher costs related to maintenance activity of $20 million, and general cost escalation.

Other Operating Expense

Other operating expenses decreased by $12 million for the twelve month comparative period, primarily due to lower construction expense of $9 million and 2019 closure costs, that were not present in 2020 expense, related to the closure of our Warren facility in March 2019.

General and Administrative Expense

General and administrative expenses decreased by $2 million for the twelve month comparative period primarily due to a decrease in compensation expense as part of cost reductions in response to COVID-19.

Impairment Charges

Due to the marginal outcome of our review of goodwill recorded for our CES reporting unit as of October 1, 2019, we continued to monitor the CES reporting unit for impairment through the end of the first quarter of 2020. We performed an interim impairment test via a quantitative valuation as of March 31, 2020. As a result, in the first quarter of 2020, we recorded an impairment of $16 million, net of tax benefit of $3 million, which represents the carrying amount of our CES reporting unit in excess of its estimated fair value as of the testing date.

RESULTS OF OPERATIONS — NON-OPERATING INCOME ITEMS

Years Ended December 31, 2020 and 2019

Other (Expense) Income
 Year Ended December 31,Variance
Increase (Decrease)
 202020192020 vs 2019
(In millions)
Interest expense$(133)$(143)$10 
Gain on sale of business26 49 (23)
Loss on extinguishment of debt(12)— (12)
Other income (expense), net— (1)
Total other (expense) income$(119)$(93)$(26)

Interest expense for the year ended December 31, 2020 decreased by $10 million as compared to the prior year primarily due to lower average rates on our credit facilities.

During the year ended December 31, 2020, we recorded a $9 million gain in connection with the financial close of our Newhurst Energy Recovery Facility development project and a $17 million gain in connection with the financial close of our Protos Energy Recovery Facility project. For additional information, see Item 8. Financial Statements And Supplementary Data — Note 3. New Business and Asset Management.

During the year ended December 31, 2019, we recorded a $56 million gain related to the Rookery South Energy Recovery Facility development project and an $11 million loss related to the divestiture of our Springfield and Pittsfield WtE facilities.

During the year ended December 31, 2020, we recorded a $12 million loss on extinguishment of debt comprised of approximately $10 million related to the redemption of our 5.875% Senior Notes due 2024 and approximately $1 million related to the refinancing of our tax-exempt bonds. For additional information, see Item 8. Financial Statements And Supplementary Data — Note 16. Consolidated Debt.

42

Table of Contents
Income Tax (Benefit) Expense:
 Year Ended December 31,Variance
Increase (Decrease)
 202020192020 vs 2019
(In millions, except percentages)
Income tax benefit$(18)$(7)$(11)
Effective income tax rate37 %264 %

The decrease in the effective tax rate for the year ended December 31, 2020, compared to the year ended December 31, 2019 is primarily due to the to the combined effects of (i) the impact of a smaller gain on the Newhurst and Protos transaction in 2020 compared to gain on the Rookery transaction in 2019, (ii) a discrete tax benefit adjustment in 2020 related to tax carryforwards and (iii) the discrete tax benefit related to the release of State FIN 48 reserve for uncertain tax position.

For additional information, see Item 8. Financial Statements And Supplementary Data — Note 9. Income Taxes.

Supplementary Financial Information — Adjusted EBITDA (Non-GAAP Discussion)

To supplement our results prepared in accordance with GAAP, we use the measure of adjusted earnings before interest taxes depreciation and amortization ("Adjusted EBITDA"), which is a non-GAAP financial measure as defined by the SEC. This non-GAAP financial measure is described below, and is not intended as a substitute and should not be considered in isolation from measures of financial performance prepared in accordance with GAAP. In addition, our use of non-GAAP financial measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. The presentation of Adjusted EBITDA is intended to enhance the usefulness of our financial information by providing a measure which management internally uses to assess and evaluate the overall performance of its business and those of possible acquisition candidates, and highlight trends in the overall business.

We use Adjusted EBITDA to provide additional ways of viewing aspects of operations that, when viewed with the GAAP results provide a more complete understanding of our core business. As we define it, Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, as adjusted for additional items subtracted from or added to net income including the effects of impairment losses, gains or losses on sales, dispositions or retirements of assets, adjustments to reflect the Adjusted EBITDA from our unconsolidated investments, adjustments to exclude significant unusual or non-recurring items that are not directly related to our operating performance plus adjustments to capital type expenses for our service fee facilities in line with our credit agreements. We adjust for these items in our Adjusted EBITDA as our management believes that these items would distort their ability to efficiently view and assess our core operating trends. As larger parts of our business are conducted through unconsolidated investments, we adjust EBITDA for our proportionate share of the entity's depreciation and amortization, interest expense, tax expense and other adjustments to exclude significant unusual or non-recurring items that are not directly related to the entity's operating performance, in order to improve comparability to the Adjusted EBITDA of our wholly owned entities. We do not have control, nor have any legal claim to the portion of our unconsolidated investees' revenues and expenses allocable to our joint venture partners. As we do not control, but do exercise significant influence, we account for these unconsolidated investments in accordance with the equity method of accounting. Net income (losses) from these investments are reflected within our consolidated statements of operations in Equity in net income from unconsolidated investments.

Adjusted EBITDA should not be considered as an alternative to net income or cash flow provided by operating activities as indicators of our performance or liquidity or any other measures of performance or liquidity derived in accordance with GAAP.
43

Table of Contents
In order to provide a meaningful basis for comparison, we are providing information with respect to our Adjusted EBITDA for the years ended December 31, 2020 and 2019, respectively, reconciled for each such period to net income and cash flow provided by operating activities, which are believed to be the most directly comparable measures under GAAP. The following is a reconciliation of Net (loss) income to Adjusted EBITDA (in millions):
 Year Ended December 31,
Adjusted EBITDA20202019
Net (loss) income$(28)$10 
Depreciation and amortization expense224 221 
Interest expense133 143 
Income tax benefit(18)(7)
Impairment charges (a)
19 
Net gain on sale of businesses and investments (b)
(26)(49)
Loss on extinguishment of debt (c)
12 — 
Property insurance recoveries, net(1)— 
Loss on asset retirements
Accretion expense
Business development and transaction costs (f)
Severance and reorganization costs (d) (f)
13 
Stock-based compensation expense29 25 
Adjustments to reflect Adjusted EBITDA from unconsolidated investments24 25 
Capital type expenditures at client owned facilities (e)
36 34 
Other (f)
Adjusted EBITDA $424 $428 
(a)During the year ended December 31, 2020, we recorded a $19 million non-cash impairment charge related to our Covanta Environmental Solutions reporting unit.
(b)During the year ended December 31, 2020, we recorded a $26 million gain on the sale of business and investments comprised of a $9 million gain related to the Newhurst Energy Recovery Facility development project and a $17 million gain related to the Protos Energy Recovery Facility development project.
During the year ended December 31, 2019, we recorded a $56 million gain related to the Rookery South Energy Recovery Facility development project and a $11 million loss related to the divestiture of our Springfield and Pittsfield WtE facilities.
(c)During the year ended December 31, 2020, we recorded a $12 million loss on extinguishment of debt comprised of approximately $10 million related to the redemption of our 5.875% Senior Notes due 2024 and approximately $1 million related to the refinancing of our tax-exempt bonds.
(d)During the years ended December 31, 2020 and 2019, we recorded $5 million and $13 million, respectively, of costs related to our ongoing asset rationalization and portfolio optimization efforts, early retirement program, and certain organizational restructuring activities.
(e)Adjustment for capital equipment related expenditures at our service fee operated facilities which are capitalized at facilities that we own.
(f)Added back under the definition of Adjusted EBITDA in Covanta Energy, LLC's credit agreement.

44

Table of Contents
The following is a reconciliation of cash flow provided by operating activities to Adjusted EBITDA (in millions):
 Year Ended December 31,
 20202019
Cash flow provided by operating activities
$254 $226 
Cash paid for interest, net of capitalized interest112 152 
Cash (refunded) paid for taxes, net(4)
Capital type expenditures at service fee operated facilities (a)
36 34 
Equity in net income from unconsolidated investments
Adjustments to reflect Adjusted EBITDA from unconsolidated investments 24 25 
Dividends from unconsolidated investments (9)(9)
Adjustment for working capital and other(11)
Adjusted EBITDA$424 $428 
(a)See Adjusted EBITDA Note (e) above.

For additional discussion related to management’s use of non-GAAP measures, see Liquidity and Capital Resources — Supplementary Financial Information — Free Cash Flow (Non-GAAP Discussion) below.

BUSINESS OUTLOOK

In October 2020, we announced the launch of a comprehensive strategic review of our assets, operations, growth priorities, and capital structure. This review is an opportunity to explore all options to enhance stockholder value, including assessing plans for each of our business lines and geographies. This review will be broad in scope and will be completed in due course. The board of directors appointed Michael Ranger as President and Chief Executive Officer to lead this review and its subsequent execution.

At the outset of the strategic review, no explicit plans were established and there is no defined end point of the review. Key objectives of the review include:

Capitalizing on potential undervaluation of certain Covanta assets and operations as implied in Covanta's consolidated equity market value;
Enhancing the profitability of existing Covanta assets and operations;
Prioritizing capital allocation and areas of focus; and
Reducing indebtedness and improving leverage ratios.

The review is now in its initial stages and the first execution steps are anticipated to be announced in the first half of 2021.

In 2021 and beyond, we expect that our financial results will be affected by several factors, including: market prices, contract transitions, new contracts, new project development and construction, acquisitions, potential divestitures, potential non-renewal of certain contracts and the organic growth of earnings and cash flow generated by our existing assets.

In 2021, the following specific factors are expected to impact our financial results as compared to 2020:

Positive factors include:

Waste markets are modestly improving given the lessening impact of the pandemic on waste volumes, as well as the ongoing secular trends of increasing demand for sustainable waste disposal and decreasing landfill capacity in certain of our core markets; and
The market prices for ferrous and non-ferrous metals increased in the latter part of 2020, and to the extent that these higher price continue, they would lead to improvement in recycled metals revenue in 2021.

Negative factors include:

The cessation of temporary pandemic-related cost reduction initiatives, which generated approximately $24 million in savings during 2020, is expected to result in higher year-over-year operating costs; and
Higher insurance costs.
45

Table of Contents
LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are our unrestricted cash and cash equivalents, cash flow generated from our ongoing operations, and unutilized capacity under our $1.3 billion senior secured credit facilities, consisting of a $400 million term loan ("Term Loan") and a $900 million revolving credit facility (the “Revolving Credit Facility”) (collectively referred to as the "Credit Facilities"), which we believe will allow us to meet our liquidity needs. Our business is capital intensive and our ability to successfully implement our strategy is, in part, dependent on the continued availability of capital on desirable terms. For additional information regarding our credit facilities and other debt, see Item 8. Financial Statements And Supplementary Data — Note 16. Consolidated Debt.

In 2021, we expect to generate net cash from operating activities that will be sufficient to meet our cash requirements including funding capital expenditures to maintain our existing assets and paying our ongoing dividends to stockholders. If there were any shortfalls, we have available liquidity under our Revolving Credit Facility. See Results of Operations — Business Outlook above for discussion of the factors impacting our 2021 business outlook.

We generally intend to refinance our debt instruments prior to maturity with like-kind financing in the bank and/or debt capital markets in order to maintain a capital structure comprised primarily of long-term debt, which we believe appropriately matches the long-term nature of our assets and contracts.

The loan documentation governing the Credit Facilities contains various affirmative and negative covenants, as well as financial maintenance covenants (financial ratios), that limit our ability to engage in certain types of transactions. We were in compliance with all of the covenants under the Credit Facilities as of December 31, 2020. Further, we do not anticipate our existing debt covenants to restrict our ability to meet future liquidity needs.

As of December 31, 2020, our potential sources of near-term liquidity included (in millions):
 As of December 31, 2020
Cash$55 
Unutilized capacity under the Revolving Credit Facility443 
Total cash and unutilized capacity under the Revolving Credit Facility$498 

As of December 31, 2020, we held unrestricted cash balances of $55 million, of which $48 million was held by international subsidiaries and not generally available for near-term liquidity in our domestic operations. In addition, as of December 31, 2020, we held restricted cash balances of $17 million. Restricted funds held in trust are generally amounts received and held by third-party trustees relating to certain projects we own. We generally do not control these accounts and these funds may be used only for specified purposes. For additional information on restricted funds held in trust, see Item 8. Financial Statements And Supplementary Data — Note 1. Organization and Summary of Significant Accounting Policies — Restricted Funds Held in Trust.

Our primary future cash requirements will be to fund capital expenditures to maintain our existing businesses, service our debt, invest in the growth of our business, and return capital to our stockholders. We believe that our liquidity position and ongoing cash flow from operations will be sufficient to finance these requirements for at least the next twelve months.

The following summarizes our key financing activities completed during the year ended December 31, 2020:

In December 2020, we amended our existing Receivables Purchase Agreement (“RPA”) to, among other things, increase the aggregate purchase limit from $100 million to $120 million. For additional information, see Item 8. Financial Statements And Supplementary Data — Note 10. Accounts Receivable Securitization for further information.
In August 2020, we entered into a loan agreement with the National Finance Authority ("NFA"), a component unit of the Business Finance Authority of New Hampshire, under which they agreed to issue $39.4 million 3.625% Resource Recovery Refunding Revenue Bonds Series 2020A, maturing on July 1, 2043, and $90 million 3.750% Resource Recovery Refunding Revenue Bonds Series 2020B, maturing on July 1, 2045 (collectively the "New Hampshire 2020 Bonds"). For additional information, see Item 8. Financial Statements And Supplementary Data — Note 16. Consolidated Debt for further information.
In August 2020, we issued $400 million aggregate principal amount of 5.00% Senior Notes due 2030. We used the net proceeds along with cash on hand and direct borrowings under our Revolving Credit Facility to fund the optional
46

Table of Contents
redemption of all of our 5.875% Senior Notes due 2024 ("2024 Senior Notes") and to pay transaction fees and expenses and accrued interest. For additional information, see Item 8. Financial Statements And Supplementary Data — Note 16. Consolidated Debt for further information.
In January 2020, in connection with our Zhao County agreement, we received proceeds of RMB 61 million ($9 million) through a loan agreement with a third party. We subsequently contributed the entire amount of the loan proceeds to the equity investment entity which owns the project in the form of a shareholder loan which is convertible to equity. See Item 8. Financial Statements And Supplementary Data — Note 3. New Business and Asset Management for further information.

Impact of COVID-19 on our Liquidity

Although substantial uncertainties remain regarding the duration and future impacts of the COVID-19 pandemic, Covanta’s liquidity position has not been materially adversely impacted to date. Our WtE facilities are operating without material disruption and cash receipts to date remain generally consistent with pre-pandemic levels. We continue to have access to over $443 million of unutilized capacity under our Revolving Credit Facility and are not currently aware of any impediments to drawing that capacity when and as needed.

We do not face any significant debt maturities until 2023 when our Credit Facilities mature. The majority of our capital structure (approximately 80%) is either fixed rate or swapped to fixed. Our floating exposures are the U.S. Dollar London Interbank Offered Rate (“USD LIBOR”) based and will fluctuate with USD LIBOR, and current USD LIBOR rates are lower than those prevailing at the same time last year.

Further, we believe that we have significant covenant flexibility under the maintenance covenants of our Credit Facilities and expect to remain in full compliance with these covenants.

In 2020, due primarily to the uncertainty surrounding the COVID-19 pandemic, we announced that our Board of Directors lowered the annualized dividend payout to $0.32 per share beginning with the dividend declared in the second quarter of 2020. This represented an approximately two-thirds reduction and results in increased cash retention for other uses totaling approximately $90 million on an annualized basis. We believe that this reduced payout results in a more balanced capital allocation policy that continues to provide attractive returns to stockholders, while preserving liquidity in the near-term and accelerating balance sheet improvement over time.

For a full discussion of risks associated with COVID-19, see Part I — Item 1A. Risk Factors.

Share Repurchases and Dividends

For additional information on share repurchases, see Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities and Item 8. Financial Statements And Supplementary Data — Note 5. Equity and Earnings Per Share ("EPS").

47

Table of Contents
Sources and Uses of Cash Flow

Year Ended December 31, 2020 vs. Year Ended December 31, 2019

Net cash provided by operating activities for the year ended December 31, 2020 increased by $28 million from the prior year period primarily due to to a $10 million savings in interest from the prior year associated with debt refinancings at favorable rates and a net cash benefit from working capital of $12 million.

Net cash used in investing activities for the year ended December 31, 2020 increased by $31 million from the prior year period due to an increase in capital expenditures of $4 million, which primarily related to planned long-term maintenance projects at certain WtE facilities, partially offset by reduced investment in growth projects. Additionally, we increased investments in our UK development projects and in our project in Zhao County. For additional information on the above investing transactions refer to Item 8. Financial Statements And Supplementary Data — Note 3. New Business and Asset Management.

Net cash used in financing activities for the year ended December 31, 2020 decreased by $51 million from the prior year period primarily due to the reduction of our quarterly dividend amount from $0.25 per quarter to $0.08 per quarter, which resulted in a reduction of $44 million.

For a discussion of the sources and uses of cash flow for the years ended December 31, 2019 and 2018, please refer to Part II- Item 7. Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2019.

Supplementary Financial Information — Free Cash Flow (Non-GAAP Discussion)

To supplement our results prepared in accordance with GAAP, we use the measure of Free Cash Flow which is a non-GAAP measure as defined by the SEC. This non-GAAP financial measure is not intended as a substitute and should not be considered in isolation from measures of liquidity prepared in accordance with GAAP. In addition, our use of Free Cash Flow may be different from similarly identified non-GAAP measures used by other companies, limiting its usefulness for comparison purposes. The presentation of Free Cash Flow is intended to enhance the usefulness of our financial information by providing a measure which management internally uses to assess and evaluate the overall performance of its business and those of possible acquisition candidates, and highlight trends in the overall business.

We use the non-GAAP financial measures of Free Cash Flow as criteria of liquidity and performance-based components of employee compensation. Free Cash Flow is defined as cash flow provided by operating activities, less maintenance capital expenditures, which are capital expenditures primarily to maintain our existing facilities. We use Free Cash Flow as a measure of liquidity to determine amounts we can reinvest in our core businesses, such as amounts available to make acquisitions, invest in construction of new projects, make principal payments on debt, or return capital to our stockholders through dividends and/or stock repurchases. For additional discussion related to management’s use of non-GAAP measures, see Results of Operations — Supplementary Financial Information — Adjusted EBITDA (Non-GAAP Discussion) above.

In order to provide a meaningful basis for comparison, we are providing information with respect to our Free Cash Flow for the years ended December 31, 2020 and 2019, reconciled for each such period to cash flow provided by operating activities, which we believe to be the most directly comparable measure under GAAP.

The following is a reconciliation of Net cash provided by operating activities to Free Cash Flow (in millions):
 Year Ended December 31,
 20202019
Net cash provided by operating activities
$254 $226 
Add: Changes in restricted funds - operating (a)
20 
Less: Maintenance capital expenditures (b)
(160)(106)
Free Cash Flow$95 $140 
(a)Adjustment for the impact of the adoption of ASU 2016-18 effective January 1, 2018. As a result of adoption, the statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, changes in restricted funds are eliminated in arriving at net cash, cash equivalents and restricted funds provided by operating activities.
(b)Purchases of property, plant and equipment are also referred to as capital expenditures. Capital expenditures that primarily maintain existing facilities are classified as maintenance capital expenditures.

48

Table of Contents
The following table provides the components of total purchases of property, plant and equipment (in millions):
 Year Ended December 31,
 20202019
Maintenance capital expenditures$(160)$(106)
Net maintenance capital expenditures paid but incurred in prior periods12 (9)
Total ash processing system(13)(9)
Capital expenditures associated with other organic growth initiatives(1)(13)
Capital expenditures associated with the New York City MTS contract— (19)
Total capital expenditures associated with growth investments (c)
(14)(41)
Capital expenditures associated with property insurance events— (2)
Total purchases of property, plant and equipment
$(162)$(158)
(c) Total growth investments represents investments in growth opportunities, including organic growth initiatives, technology, business development, and other similar expenditures, net of third party loans collateralized by unconsolidated project equity.
Capital expenditures associated with growth investments$(14)$(41)
UK business development projects (13)(3)
Investment in equity affiliate (15)(14)
Asset and business acquisitions, net of cash acquired— 
Less: third party project loan proceeds collateralized by project equity— 
Total growth investments$(33)$(56)

Available Sources of Liquidity

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments having maturities of three months or less from the date of purchase. These short-term investments are stated at cost, which approximates fair value. Balances held by our international subsidiaries are not generally available for near-term liquidity in our domestic operations.
As of December 31,
20202019
(In millions)
Domestic$$17 
International48 20 
Total Cash and Cash Equivalents$55 $37 

Credit Facilities

As of December 31, 2020, Covanta Energy’s senior secured credit facilities consisted of the Revolving Credit Facility and the Term Loan both expiring 2023 (collectively referred to as the "Credit Facilities"). For a detailed description of the terms of the Credit Facilities, see Item 8. Financial Statements And Supplementary Data — Note 16. Consolidated Debt.

49

Table of Contents
Consolidated Debt

The face value of our consolidated debt was as follows (in millions):
 As of December 31,
 20202019
Corporate Debt:
Revolving credit facility$222 $183 
Term loan375 385 
Senior notes 1,200 1,200 
Tax-exempt bonds544 544 
Equipment financing arrangements 78 85 
Finance leases (1)
China venture loan— 
Total corporate debt (including current portion)$2,435 $2,403 
Project Debt:
Domestic project debt - service fee facilities $45 $47 
Union County WtE facility finance lease (tip fee structure)78 84