Covanta snaps up US waste-to-energy plants in $450m deal

New Jersey could be about to become famous for a rather different sort of " waste-management business" than that practiced by Tony Soprano.

Covanta Holding Corporation has this week continued its drive to establish the New Jersey-based company as one of the leading players in the booming global waste-to-energy market, announcing that it has completed the first phase of its $450m (£278m) cash acquisition of Veolia Environment Services' North American waste-to-energy business.

The first phase of the acquisition, originally announced early last month, will see Covanta gain six waste-to-energy businesses in California, New York, Philadelphia and Canada. It also gives the firm a transfer station based in Abingdon, PA.

The second phase, which the company hopes to complete by the end of this year, will also see the company take control of a waste-to-energy plant in Miama-Dade, Florida.

The Veolia acquisitions, when complete, will add three million tons of waste-processing capacity per year to Covanta's portfolio, which also has operations in Europe and Asia, and $60m in operating revenue.

The move comes as a new report from research firm Frost & Sullivan highlighted Europe as the top global market, predicting that the European waste-to-energy market will continue to grow for at least the next 10 years.

It added that 100 new waste-to-energy plants are expected to be opened in Europe by 2010.

The momentum for growth has been driven in large part by the EU's Landfill Directive, which has put pressure on governments to move away from sending waste to traditional landfill sites and identify more efficient means of disposal. The legislation has provided waste-to-energy plants with guaranteed waste streams, while energy utilities have also been attracted by the sector's low-carbon credentials.

John Raspin, who directs the analyst's energy and environment practice, said the growth of the sector was attracting interest from a new breed of investors. "Across Europe, the public sector is the traditional owner of waste-to-energy facilities," he said. "This is changing, as large-scale investment is required to construct newer, environmentally friendly facilities."