California Air Resources Board Precertifies Catalytica Energy Systems Xonon Cool Combustion System On a Kawasaki Gas Turbine Engine.

Business Editors

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Aug. 8, 2002

Catalytica Energy Systems, Inc. (NASDAQ: CESI) announced today that it has successfully completed an Equipment and Process Precertification Program administered by the California Air Resources Board (CARB), which verified the air quality-related performance claims of its Xonon(R) Cool Combustion system.

As part of the precertification process, CARB conducted an independent evaluation and verification of Xonon's emissions performance while operating on a 1.4 megawatt (MW) Kawasaki M1A-13X gas turbine operating at Silicon Valley Power, a municipal power company in Santa Clara, California. Upon evaluation of all test data, the results of the study verified demonstrated emissions of nitrogen oxides (NOx) no greater than 2.5 parts per million (ppm), and carbon monoxide (CO) emissions no greater than 6 ppm. Following this evaluation, CARB issued an Executive Order serving as precertification of the air quality benefits associated with the use of Xonon. As a result, CARB will now notify all pollution control and air quality management districts in California of its determination that claims have been verified, which will provide an advanced opportunity for these districts to become familiar with Xonon and its performance when applying for a permit to operate new gas turbines.

Ricardo Levy, interim president and CEO of Catalytica Energy Systems, stated, "Receiving this validation by CARB further enhances the recognition and credibility of Xonon in the marketplace as a proven technology that can enable ultra-low emissions power production by gas turbines. CARB precertification is highly regarded, and is in fact recognized by a number of other states when reviewing permit applications. Further, it is our understanding that many states look more favorably at technologies that have passed ETV (Environmental Technology Verification) and CARB precertification. Xonon's performance has been verified under both programs, adding to already existing benefits of our product that give power projects considering the use of Xonon-equipped turbines the potential for expedited permitting."

The Equipment and Process Precertification Program is a voluntary statewide program administered by CARB through which manufacturers of products that have a beneficial impact on air quality can have their product's performance claims independently verified. The objective of the program is to simplify the permitting process by providing advanced independent evaluation of a technology, which can then be used as the basis for BACT (best available control technology) determination.

The complete evaluation report detailing Xonon's performance verification along with Executive Order G-096-029-034 may be accessed via the California ARB website at http://arbis.arb.ca.gov/eqpr/Catalytica.htm. A complete listing of California ARB precertified equipment along with more information regarding the Precertification Program may be accessed at the same website at http://www.arb.ca.gov/eqpr/mainlist.htm.

The California Air Resources Board is a department of the California Environmental Protection Agency. Its mission is to promote and protect public health, welfare and ecological resources through the effective and efficient reduction of air pollutants while recognizing and considering the effects on the economy of the state. The ARB oversees all air pollution control efforts in California to attain and maintain health-based air quality standards.

Catalytica Energy Systems designs, develops, and manufactures advanced products for cleaner, more effective energy production. Its proprietary technologies include the use of catalysts to create solutions to mitigate the environmental impact of power generation. The Company is marketing its first product, Xonon(R) Cool Combustion, 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 www.CatalyticaEnergy.com.

This news release contains forward-looking statements regarding Xonon's potential to facilitate and / or expedite the permitting process for power projects considering the use of Xonon-equipped turbines, and the competitive position of Catalytica Energy Systems. Actual results could differ and such differences could be material. These statements involve risks and uncertainties, including without limitation, the risk that there may be unanticipated technical, commercial, or other factors related to Xonon's performance on the M1A-13X, that marketing, project development, and installation timelines and regulatory review outcomes are uncertain, and that results may differ from those stated and the other risks set forth in the Catalytica Energy Systems' Forms 10-K and 10-Q filed with the Securities and Exchange Commission on April 1, 2002 and May 14, 2002 respectively. Catalytica Energy Systems undertakes no obligation to update publicly any forward-looking statements to reflect new information, events, or circumstances occurring after the date of this release.

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