Covanta

Covanta Holding Corporation is a public company headquartered in Morristown, New Jersey. It provides energy-from-waste and industrial waste management services. Most of its revenue comes from operating power plants that burn trash as fuel. Covanta charges a fee for waste disposal, sells electricity produced in the process, and recovers metal for recycling.

Covanta
TypePublic company
NYSE: CVA
Russell 2000 Component
IndustryRenewable Energy/Waste Management
HeadquartersMorristown, New Jersey
Key people
Michael W. Ranger, President and Chief Executive Officer[1]
Samuel Zell, Chairman[1]
Revenue$1,868.0 million (2018)[2]
$63.0 million (2018)[2]
$152.0 million (2018)[2]
Total assets$3,843 million (2018)[2]
Total equity$487.0 million (2018)[2]
Number of employees
~4,000 (2018)[2]
Websitewww.covanta.com

Corporate history

Early history

Ogden Corporation, which later became the parent corporation of Covanta, was founded in 1939.[3] Ogden was originally a holding company for investments in utility businesses.[4] In 1952, Ogden acquired W.A. Case & Son Manufacturing Company, shifting its focus to manufacturing.[5] Over time, it expanded into other industries, like entertainment and food, through acquisitions.[5][6] In 1955, Ogden acquired a metal scrap recycling company called Luria Brothers.[6] Luria's former CEO Ralph E. Ablon became the CEO of Ogden in 1962.[7]

In the 1980s, David Sokol was appointed CEO.[8] Ogden shifted from primarily a manufacturing business to a services company.[7] Its first investment in the services industry was the $118 million acquisition of Allied Maintenance Corporation in 1982.[7] In 1984, Ogden spun-off seven of its industrial businesses, which became owned primarily by Ogden employees.[7] By 1987, substantially all of Ogden's revenues were from services it didn't previously provide, like warehousing, running concession stands at stadiums, and janitorial services.[9] As of 1991, Ogden had done 19 acquisitions and mergers over an eight-year period.[10]

Energy-from-waste

Ogden first entered the energy-from-waste business in 1983, when it acquired intellectual property rights to German incinerator technology commonly used in Europe, as well as a method of hazardous waste disposal.[4][9][11] By 1986, Ogden had five energy-from-waste plants under construction and agreements in place to build four more.[7] By 1995, half of Ogden's revenues were from energy-from-waste projects.[12]

In 1991, Ablon's son Richard took over as CEO.[5] In 1991, it acquired a professional services company called ERC Environmental and Energy Services for $80 million.[10] In 1995, Ogden was restructured into three divisions: aviation, energy, and entertainment.[12] Some of its less profitable businesses, such as computer services and concession stands, were sold.[12] In 1999, Ogden acquired several water parks, including Wet'n Wild Inc.[5]

In 1999, Ablon resigned as CEO; he was replaced by Scott Mackin.[13] That year, Ogden planned a restructuring where its aviation and entertainment divisions would be spun-off as a separate public company.[14] However, Ogden instead sold its entertainment and aviation businesses to focus on energy and environmental services.[13][15][16] In 2000 its theme and water parks were sold to Alfa Holdings for $148 million;[15] that year, it also sold its concessions, food, uniform, and child-care interests to Aramark Corporation for $225 million.[15]

Covanta

In 2001, Ogden's name was changed to Covanta to represent its focus on energy.[4][17][18] Covanta and its 155 subsidiaries filed for bankruptcy in 2002.[4] The bankruptcy was prompted by the California electricity crisis and the economic downturn following the September 11 attacks.[4]

In 2004, Anthony Orlando was appointed CEO.[19] That same year, 20 banks agreed to provide $463 million in financing to help the company get out of bankruptcy, restructure, and sell itself.[17] Covanta came out of bankruptcy in 2004, when it was purchased by Danielson Holding Corporation.[4] In 2005, Danielson sold Ogden's interests in casinos, hockey stadiums, and other areas to focus on its energy-from-waste business.[4] Later that year, Covanta acquired an energy-from-waste business called American Ref-Fuel for $2 billion.[4]

In 2009, Covanta bought the energy-from-waste business of Veolia Environment for $450 million.[20] This was followed by acquisitions of environmental services companies Advanced Waste Services and GARCO for undisclosed sums in 2014.[21][22]

In 2015, Covanta appointed Stephen J. Jones as its new CEO.[23]

As of October 2020, Michael Ranger has succeeded Stephen J. Jones as Covanta's CEO.[24]

Operations

Covanta develops and operates facilities that burn trash to produce electricity, recover metals from the waste stream for recycling, and provide other industrial waste management services.[25] As of 2013, about 60% of Covanta's revenue came from selling trash disposal services and 25% from selling electricity produced by burning trash.[26] The remainder of its revenue was from metal recycling, construction, and other services.[26]

As of 2018, Covanta operated more than 40 waste-to-energy plants in North America, China, and Europe.[27][28] Most of Covanta's revenue came from long-term contracts with local governments or utility providers.[27][29] It also benefits from tax incentives for green energy projects.[7]

As of 2018, the company burned 20 million tons of trash annually and recycled 550,000 tons of metal.[25] A majority of the trash is organic substances.[30] It also burns a smaller amount of pharmaceutical byproducts, like expired medicines.[31] Each ton of garbage contains about 50 pounds of metal that is removed with magnets, then sold for recycling.[32]

At its plants, Covanta feeds trash into a furnace burning at 1,800 degrees Fahrenheit.[32] The furnace produces steam that rotates a turbine, powering a generator.[32] The remaining ash is rapidly cooled to prevent the formation of toxic compounds, then goes through additional processing.[32] Government agencies regulate and monitor Covanta emission stacks for harmful toxins.[33] Filters and other equipment are in place to remove most of the harmful particulates,[27] and activated carbon removes most of the mercury.[33] Steam is then released into the atmosphere.[27]

Environmental and social impact

Covanta supporters say burning trash to produce energy is an environmentally-friendly way to produce power and dispose of garbage that would otherwise fill landfills.[34] Environmental critics are concerned about mercury, lead, and other toxins produced from burning garbage.[35][33] Covanta has simultaneously received awards for its positive impact on the environment, while being sued and seeing protests for its environmental impacts.[4]

A 2008 study by the U.S. Environmental Protection Agency found that waste-to-energy plants were better for the environment than landfills, in part because they reduced the methane garbage produced in landfills and reduced reliance on other fuels like coal.[35] A study by Columbia University said if waste-to-energy was as popular in the United States as it is in Europe, the U.S. would reduce carbon emissions by 264 million tons annually.[27] However, many environmentalists are skeptical about Covanta's claim that the steam emitted from a plant's furnace does not contain excess toxins.[27] Some environmentalist distrust government monitoring of Covanta's emission stacks, and have lobbied for more regulation.[33]

Additionally, Covanta has been cited numerous times for exceeding air pollution standards.[16] For example, one Covanta plant in Newark was cited for violating emission standards;[36] in 2010, a related lawsuit was settled for $875,000, which was used for a local green space program.[37] Similar problems have led to fines and settlements for mercury emissions in Florida,[38] dioxin in Connecticut,[39] and for hydrated lime in Dublin, Ireland.[40]

An academic from Columbia University has said most energy-from-waste emission criticisms are related to dated technology or misinformation.[27] Covanta said its facilities are compliant with emission standards 99.9% of the time.[36]

Covanta works with local governments to safely dispose of prescription drugs.[41][42] In 2014, there was a controversy about whether an Oregon Covanta facility was burning aborted fetuses and other human body parts as part of its medical waste.[43] Covanta said its plant never received aborted fetuses as fuel.[44]

References
  1. "Covanta 2020 8-K". SEC.gov. October 30, 2020. Retrieved October 30, 2020.
  2. "Covanta 2019 10-K". SEC.gov. October 30, 2020. Retrieved October 30, 2020.
  3. "Covanta Holding: A Brief Introduction". Market Realist. June 29, 2015. Retrieved December 3, 2019.
  4. "Company seeking to build trash port is trying new type of venture". The Virginia Pilot. October 9, 2006. Retrieved September 15, 2019.
  5. Covanta Energy. International Directory of Company Histories. 64. St. James Press. 2004.
  6. "Bright Outlook at Ogden Keyed to Diversification". Barron’s. May 29, 1967. p. 23.
  7. Cuff, Daniel (January 26, 1986). "So long, Smokestacks". The New York Times. Retrieved September 15, 2019.
  8. Dumaine, Brian (August 2, 2010). "Warren Buffett's Mr. Fix-It: Full Version". David Sokol: Warren Buffett's Mr. Fix-It. Retrieved November 6, 2019.
  9. Cochran, Thomas (November 28, 1988). "Mutual Choice: Cleaning up with Ogden". Barron’s. p. 44.
  10. Hinden, Stan (January 14, 1991). "Ogden Moving Ahead with Purchase of Eric Environmental". Washington Post. Retrieved September 15, 2019.
  11. Sheldon, Andrew (March 28, 2016). "At Eco-Friendly Covanta Nothing Goes to Waste". NJBIZ. 29 (13).
  12. Auerbach, Jonathan (November 10, 1995). "Ogden Corp. Plans Divestitures; Move to Cause Charge". The Wall Street Journal. p. B10.
  13. Welsh, Jonathan (September 20, 1999). "Ogden Announces Change in Strategy, CEO's Resignation, Earnings Shortfall". The Wall Street Journal. p. B9.
  14. "Ogden to Break Up Three Businesses Into Two Publicly Traded Companies". WSJ. March 12, 1999. Retrieved September 15, 2019.
  15. "Ogden Agrees to Sell Concessions Business to Aramark". The New York Times. March 31, 2000. Retrieved September 15, 2019.
  16. Strauss, Eric (August 19, 2008). "Covanta's waste-burning plants are controversial, but seen as energy solution". nj.com. Retrieved September 12, 2019.
  17. "Covanta Energy Files for Chap. 11". Los Angeles Times. April 2, 2002. Retrieved September 14, 2019.
  18. Kadleck, Chrissy (June 21, 2010). "Energy refocus was key move for Covanta". The Barron's.
  19. Calia, Michael (January 5, 2015). "Former Air Products Executive to Become Covanta CEO". WSJ. Retrieved November 6, 2019.
  20. Roychoudhury, Arup (July 6, 2009). "Covanta to buy facilities from Veolia subsidiary". U.S. Retrieved October 15, 2019.
  21. "Waste-to-Energy Firm Covanta Buys Advanced Waste". Waste360. May 22, 2015. Retrieved October 16, 2019.
  22. Bollinger, Luke (March 22, 2018). "Triad environmental firm to expand with new facilities and jobs". Triad Business Journal. Retrieved October 15, 2019.
  23. Kraus, Scott (January 5, 2015). "Covanta appoints former Air Products exec its new CEO". mcall.com. Retrieved September 14, 2019.
  24. Bradshaw, Kaitlin (October 30, 2020). "Covanta Announces New President, CEO and a Strong Q3". waste360.com. Retrieved October 30, 2020.
  25. "Covanta: Anything But A Waste (Of Time)". Seeking Alpha. July 30, 2018. Retrieved September 14, 2019.
  26. Englander, David (November 2, 2013). "No Need to Hold Your Nose!". Barron's. Retrieved September 14, 2019.
  27. Kilgore, Tomi; Linnane, Ciara (April 20, 2018). "Covanta's green tech is a hit in Europe - is the U.S. next?". MarketWatch. Retrieved September 14, 2019.
  28. Meeks, Karen Robes (September 30, 2013). "Terminal Island plant converts solid waste to energy for Long Beach residents". Press Telegram. Retrieved September 14, 2019.
  29. Englander, David (May 2, 2015). "Covanta Turns Trash to Cash". Barron's. Retrieved September 14, 2019.
  30. Wald, Matthew L. (February 19, 2008). "For Carbon Emissions, a Goal of Less Than Zero". The New York Times. Retrieved September 13, 2019.
  31. Smith, Aaron (August 27, 2007). "Stericycle, Covanta burn drugs for money". CNN. Retrieved September 13, 2019.
  32. Sullivan, Vince (August 17, 2014). "Covanta and waste by rail: Here's the plan". The Daily Times.
  33. Knauss, Tim (November 20, 2009). "Mercury discharges drastically lower as Onondaga County's trash-to-energy plant owner asks NY to renew permit". syracuse.com. Retrieved September 13, 2019.
  34. "Covanta Energy Under Fire Over Substance Raining Down On Long Island". CBS New York. February 19, 2014. Retrieved September 14, 2019.
  35. Yehle, Emily (July 8, 2013). "SOLID WASTE: Congress fuels debate over burning trash for energy". E&E News. Retrieved September 14, 2019.
  36. Murray, Brian (December 6, 2009). "Newark residents say garbage incinerator poses health risks". nj.com. Retrieved September 14, 2019.
  37. Johnson, Tom (June 7, 2019). "Energy-from-Waste Facility Agrees to Clean Up its Act". NJ Spotlight. Retrieved September 14, 2019.
  38. Connolly, Kevin P. (June 23, 2001). "Incinterator, State Strike a Deal". The Orlando Sentinel. Retrieved September 15, 2019.
  39. Nearing, Brian (August 12, 2011). "Covanta, seeking N.Y. renewable nod, pays $400,000 dioxin fine at Conn. trash-burn plant". Times Union. Retrieved September 15, 2019.
  40. Burns, Sarah; Power, Jack (March 21, 2013). "Eleven hospitalised after incident at Dublin's Poolbeg incinerator". The Irish Times. Retrieved September 15, 2019.
  41. Ryburn, Stacy (January 16, 2016). "OBN, Covanta reach 100,000 milestone in disposal of prescription drugs". Tulsa World.
  42. "Covanta partners with New York for pharmaceutical take-back program". Waste Dive. April 19, 2018. Retrieved December 3, 2019.
  43. "Is fetal tissue from B.C. used to power Oregon homes?". The Associated Press. April 24, 2014. Retrieved September 14, 2019.
  44. Francke, Tyler. "Covanta: 'We're not burning babies'". Pamplin Media Group. Retrieved December 3, 2019.
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