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Subject:  CESI to perform fuel cell research for DOE Date:  7/2/2001  9:48 AM
Author:  JohnQuixote Number:  97 of 112


MOUNTAIN VIEW, Calif. (July 2, 2001) - Catalytica Energy Systems, Inc.
(Nasdaq: CESI) announced today that it has been selected by the U.S.
Department of Energy (DOE) for an $11.2 million cost-shared contract to help
fund research and development of fuel processing technology for use in
automotive fuel cell applications.
The 36-month program will focus on developing a compact fuel-flexible fuel
processor for use with PEM fuel cells in transportation applications. The
intended outcome of the program is to design a 50 kW fuel processor capable
of converting gasoline and other fuels into pure hydrogen needed to power
the fuel cells. The current lack of viable, lightweight fuel processing
technology remains an obstacle to wide-scale commercialization of fuel cells
for vehicular use. Catalytica Energy Systems anticipates combining its
proprietary Xonon* Cool Combustion technology and its fuel reformer
technology to construct a cost-effective fuel processing system that offers
low volume and weight, high efficiencies, and rapid transient response, thus
facilitating the commercial use of fuel cells in transportation
In announcing the awards, DOE Secretary of Energy Spencer Abraham commented
on the importance of overcoming technical barriers to introducing new fuel
cell technologies to consumers. "One of the key recommendations of the
National Energy Policy is to improve energy efficiency through the
implementation of innovative technology," Secretary Abraham said. "Fuel
cell research is very promising as a future power source for transportation
and buildings but high component costs, start-up time, and size and weight
remain barriers to introducing these new technologies to the public."
"Fuel cells, hydrogen technology and advanced combustion energy engines are
among the most promising areas of the department's research and development
work," Secretary Abraham further stated. "By working together with partners
from industry and the academic community we can make the technological
advances and scientific breakthroughs needed to fully realize the potential
of these technologies."
Craig Kitchen, president and CEO of Catalytica Energy Systems, said, "We are
gratified that the DOE has recognized the potential of our technology to
deliver a fuel processing solution for expanded use of fuel cells. Receipt
of this competitive award will enable us to build on three years of research
and development of fuel reforming and processing technologies. We look
forward to broadening the application of our Xonon technology to new markets
and expanding our focus on exciting new product areas for the company."
Catalytica Energy Systems designs and develops advanced products for more
effective energy production. Its proprietary technologies include the use
of catalysts to create solutions to ease the environmental impact of power
generation. The Company's first product, Xonon* Cool Combustion, is a
breakthrough combustion technology that achieves ultra-low emissions levels
for gas turbine power production. Xonon prevents the formation of
pollution, particularly nitrogen oxides (NOx), a primary contributor to
smog, through a proprietary catalytic combustion process. Additional
technology development efforts include work on fuel processing for fuel
cells, as well as adaptation of Xonon technology to micro-turbines, hybrid
gas turbine fuel cells, and diesel applications. Find Catalytica Energy
Systems on the Worldwide Web at

This news release contains forward-looking statements regarding the receipt
of funding from the U.S. Department of Energy, the timing of receipt of such
funding, the development of a fuel processing system for use with fuel
cells, the timing for development of a fuel processing system, the ability
of the fuel processing system to effectively convert fuels into hydrogen to
power fuel cells, the ability of a fuel processing system developed by
Catalytica Energy Systems' to operate with high efficiencies, low volume,
low weight and to expand fuel cell use in transportation applications, and
the expansion of Catalytica Energy Systems' business into new product areas.
These statements involve risks and uncertainties, including without
limitation, the fact that there may be unanticipated technical, commercial
or other factors related to the development and application of a fuel
processing system for use with fuel cells in transportation applications,
and that results may differ from those stated and the other risks set forth
in the Catalytica Energy Systems' Form 10-K for the year ending December 31,
2000, filed with the Securities and Exchange Commission. Catalytica Energy
Systems undertakes no obligation to update publicly any forward-looking
statements to reflect new information, events, or circumstances after the
date of this release. Investors are encouraged to review Catalytica Energy
Systems' Form 10-K for the year ending December 31, 2000, filed with the
Securities and Exchange Commission, for additional factors that could affect
Catalytica Energy Systems' future performance.

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Editor's Note: Xonon and Xonon Cool Combustion are registered trademarks of
Catalytica Energy Systems, Inc. Mountain View, CA, USA

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