SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)

(Amendment No. 2)¹

CATALYTICA ENERGY SYSTEMS, INC.

(Name of Issuer)

COMMON STOCK,

PAR VALUE $0.001 PER SHARE

(Title of Class of Securities)

148884109

(CUSIP Number)

Kenneth F. Clifford

Morgan Stanley Capital Partners III, Inc.

1585 Broadway

New York, NY 10036

Tel: (212) 761-8179

(Name, Address and Telephone Number of

Person Authorized to Receive Notices

and Communications)

July 22, 2004

(Date of Event which Requires Filing of this Statement)

     If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box  o.

     Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

     ¹ The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.

     The information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 148884109 13D Page 2 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Morgan Stanley
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) o  (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS* Not applicable
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 3,386,748 - See Item 6
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER 3,386,748 - See Item 6
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,386,748 - See Item 5
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 19.0% – See Item 5
14	TYPE OF REPORTING PERSON* CO

[*SEE INSTRUCTIONS BEFORE FILLING OUT!]

CUSIP No. 148884109 13D Page 3 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Morgan Stanley Capital Partners III, Inc.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) o  (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS* Not applicable
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 3,386,748 - See Item 6
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER 3,386,748 - See Item 6
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,386,748 - See Item 5
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 19.0% – See Item 5
14	TYPE OF REPORTING PERSON* CO, IA

[*SEE INSTRUCTIONS BEFORE FILLING OUT!]

CUSIP No. 148884109 13D Page 4 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) MSCP III, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) o  (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS* Not applicable
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 3,386,748 - See Item 6
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER 3,386,748 - See Item 6
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,386,748 - See Item 5
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 19.0% – See Item 5
14	TYPE OF REPORTING PERSON* OO, IA

[*SEE INSTRUCTIONS BEFORE FILLING OUT!]

CUSIP No. 148884109 13D Page 5 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Morgan Stanley Capital Partners III, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) o  (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS* Not applicable
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 2,995,781 - See Item 6
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER 2,995,781 - See Item 6
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,995,781 - See Item 5
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.8% – See Item 5
14	TYPE OF REPORTING PERSON* PN

[*SEE INSTRUCTIONS BEFORE FILLING OUT!]

CUSIP No. 148884109 13D Page 6 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Morgan Stanley Capital Investors, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) o  (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS* Not applicable
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 84,253
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER 84,253
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 84,253 - See Item 5
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.5% – See Item 5
14	TYPE OF REPORTING PERSON* PN

[*SEE INSTRUCTIONS BEFORE FILLING OUT!]

CUSIP No. 148884109 13D Page 7 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) MSCP III 892 Investors, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) o  (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS* Not applicable
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 306,714 - See Item 6
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER 306,714 - See Item 6
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 306,714 - See Item 5
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.7% – See Item 5
14	TYPE OF REPORTING PERSON* PN

[*SEE INSTRUCTIONS BEFORE FILLING OUT!]

AMENDMENT NO. 2 TO SCHEDULE 13D

           This Amendment No. 2 amends the Report on Schedule 13D, originally filed on December 26, 2000, as amended by Amendment No. 1 thereto filed on February 15, 2002 (collectively, the “Schedule 13D”). Unless indicated otherwise, all items left blank remain unchanged and any items which are reported are deemed to amend and supplement the existing items in the Schedule 13D. Capitalized terms used without definitions in this Amendment No. 2 shall have the respective meanings ascribed to them in the Schedule 13D. Notwithstanding the foregoing, the Schedule 13D is amended to change each reference to “Morgan Stanley Dean Witter & Co.” and “MSDW” to “Morgan Stanley” and “MS”, respectively.

      Item 1. Security and Issuer.

      Item 1 of the Schedule 13D is hereby replaced in its entirety as follows:

     The class of equity securities to which this statement relates is the common stock, $0.001 par value per share (the “Common Stock”), of Catalytica Energy Systems, Inc., a Delaware corporation (“Catalytica Energy”). The principal executive offices of Catalytica Energy are located at 1388 North Tech Boulevard, Gilbert, Arizona 85233.

      Item 2. Identity and Background.

      Item 3. Source and Amount of Funds or Other Consideration.

      Item 4. Purpose of Transaction.

      Item 5. Interest in Securities of the Issuer.

            The aggregate number of shares that the Funds may be deemed to beneficially own has not changed. For the purposes of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended, the Funds may be deemed to beneficially own, in the aggregate, 3,386,748 shares of Common Stock, or approximately 19.0% of the outstanding shares of Common Stock.

            By virtue of the subadvisory arrangement described in Item 6 below and the relationships described in Item 2 of this statement, prior to effectiveness of such subadvisory arrangement, Metalmark (as defined in Item 6 below), MS, MSCP III, Inc. and MSCP III, LLC may be deemed to have shared voting and dispositive power with respect to the shares of Common Stock beneficially owned by MSCP III 892 Investors, L.P. and Morgan Stanley Capital Partners III, L.P. Once the subadvisory arrangement is effective, Metalmark may be deemed to have sole voting and dispositive power with respect to the shares of Common Stock owned by MSCP III 892 Investors, L.P. and Morgan Stanley Capital Partners III, L.P. See response to Item 6 below.

            None of the Reporting Persons has effected any transaction in the Common Stock during the past 60 days. None of the Reporting Persons are aware of any information that indicates that any other Reporting Person has effected any such transaction.

            By virtue of the subadvisory arrangement described in Item 6 below and the relationships described in Item 2 of this statement, prior to effectiveness of such subadvisory arrangement, Metalmark, MS, MSCP III, Inc. and MSCP III, LLC may be deemed to have the power to direct the receipt of dividends declared on the shares of Common Stock held by MSCP III 892 Investors, L.P. and Morgan Stanley Capital Partners III, L.P. and the proceeds from the sale of such shares of Common Stock. Once the subadvisory arrangement is effective, Metalmark may be deemed to have the sole power to direct the receipt of dividends declared on the shares of Common Stock held by MSCP III 892 Investors, L.P. and Morgan Stanley Capital Partners III, L.P. and the proceeds from the sale of such shares of Common Stock. See response to Item 6 below.

8 of 15

      Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

           On July 22, 2004, Metalmark Subadvisor LLC (“Subadvisor”), Metalmark Capital LLC (“Metalmark”), the parent entity of Subadvisor, and certain affiliates of MS agreed that Subadvisor will manage MSCP III 892 Investors, L.P. and Morgan Stanley Capital Partners III, L.P. on a subadvisory basis. The management authority of Subadvisor will be as set forth in a Power of Attorney, the form of which is attached hereto as Exhibit 3. This subadvisory relationship is expected to commence in the third quarter of 2004. Once the subadvisory arrangement is effective, Metalmark may be deemed to have sole voting and dispositive power with respect to the shares of Common Stock owned by MSCP III 892 Investors, L.P. and Morgan Stanley Capital Partners III, L.P. Metalmark is a new independent private equity firm led by Howard I. Hoffen and senior team members from Morgan Stanley Capital Partners. Metalmark has filed a Schedule 13D on the date hereof.

      Item 7. Material to be Filed as Exhibits.

      Exhibit 1: Joint Filing Agreement among the Reporting Persons.

      Exhibit 3: Form of Power of Attorney.

9 of 15

SIGNATURES

           After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Date: August 3, 2004

MORGAN STANLEY
By:		/s/ Peter R. Vogelsang
	Name:	Peter R. Vogelsang
	Title:	Authorized Signatory

10 of 15

           After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Date: August 3, 2004

MORGAN STANLEY CAPITAL PARTNERS
III, INC.
By:		/s/ Kenneth Clifford
	Name:	Kenneth Clifford
	Title:	Managing Director and Chief Financial Officer

11 of 15

           After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Date: August 3, 2004

MSCP III, LLC
By:	Morgan Stanley Capital Partners III, Inc., as Member
By:		/s/ Kenneth Clifford
	Name:	Kenneth Clifford
	Title:	Managing Director and Chief Financial Officer

12 of 15

     After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Date: August 3, 2004

MORGAN STANLEY CAPITAL PARTNERS
III, L.P.
By:	MSCP III, LLC, as General Partner
By:	Morgan Stanley Capital Partners III, Inc., as Member
By:		/s/ Kenneth Clifford
	Name:	Kenneth Clifford
	Title:	Managing Director and Chief Financial Officer

13 of 15

     After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Date: August 3, 2004

MSCP III 892 INVESTORS, L.P.
By:	MSCP III, LLC, as General Partner
By:	Morgan Stanley Capital Partners III, Inc., as Member
By:		/s/ Kenneth Clifford
	Name:	Kenneth Clifford
	Title:	Managing Director and Chief Financial Officer

14 of 15

     After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Date: August 3, 2004

MORGAN STANLEY CAPITAL
INVESTORS, L.P.
By:	MSCP III, LLC, as General Partner
By:	Morgan Stanley Capital Partners III, Inc., as Member
By:		/s/ Kenneth Clifford
	Name:	Kenneth Clifford
	Title:	Managing Director and Chief Financial Officer

15 of 15

SCHEDULE A

EXECUTIVE OFFICERS AND DIRECTORS
OF
MORGAN STANLEY CAPITAL PARTNERS III, INC.

            The names of the Directors and the names and titles of the Executive Officers of Morgan Stanley Capital Partners III, Inc. (“MSCP III Inc.”) are set forth below. The principal occupation for each of the persons listed below is Managing Director or other officer of Morgan Stanley & Co. Incorporated. If no address is given, the Director's or Executive Officer's business address is that of Morgan Stanley & Co. Incorporated at 1585 Broadway, New York, New York 10036. Unless otherwise indicated, each title set forth opposite an individual's name refers to MSCP III, Inc. and each individual is a United States citizen.

Name, Business Address	Title
*Howard I. Hoffen	Chairman, Chief Executive Officer and Managing Director
*Karen H. Bechtel	Managing Director
*Bernard Gault	Managing Director
*Michael C. Hoffman	Managing Director
Gustavo R. Schwed	Managing Director
Leigh J. Abramson	Managing Director
Eric T. Fry	Managing Director
Kenneth F. Clifford	Chief Financial Officer, Treasurer and Managing Director
* Director

SCHEDULE B

EXECUTIVE OFFICERS AND DIRECTORS
OF
MORGAN STANLEY

            The names of the Directors and the names and titles of the Executive Officers of Morgan Stanley (“MS”) and their principal occupations are set forth below. The business address of each of the Directors or Executive Officers is that of MS at 1585 Broadway, New York, New York 10036. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to MS and each individual is a United States citizen.

Name	Title
*Philip J. Purcell	Chairman of the Board and Chief Executive Officer
*Sir Howard Davies1	The Director, London School of Economics and Political Science
*John E. Jacob	Executive Vice President - Global Communications of Anheuser-Busch Companies, Inc.
*C. Robert Kidder	Principal of Stonehenge Partners, Inc. and Chairman of Borden Chemical, Inc.
*Charles F. Knight	Chairman of Emerson Electric Co.
*John W. Madigan	Retired; former Chairman and CEO of Tribune Company
*Miles L. Marsh	Former Chairman of the Board and Chief Executive Officer of Fort James Corporation
*Michael A. Miles	Special Limited Partner in Forstmann Little and Co.
*Laura D’Andrea Tyson	Dean of the London Business School
*Klaus Zumwinkel2	Chairman of the Board, Deutsche Post AG
Stephan F. Newhouse	President
Stephen S. Crawford	Executive Vice President and Chief Administrative Officer
David Sidwell	Executive Vice President and Chief Financial Officer
Donald G. Kempf, Jr.	Executive Vice President, Chief Legal Officer and Secretary
Tarek F. Abdel-Meguid	Head of Worldwide Investment Banking Division
Zoe Cruz	Head of Worldwide Fixed Income Division
John P. Havens	Head of Worldwide Institutional Equity Division
Roger C. Hochschild	President and COO, Discover Financial Services
Mitchell M. Merin	President and COO, Investment Management
David W. Nelms	Chairman and CEO, Discover Financial Services
Vikram S. Pandit	President and COO, Institutional Securities Group
Joseph R. Perella	Chairman of Institutional Securities Group
John H. Schaefer	President and COO, Individual Investor Group
1    Sir Howard Davies is an English citizen and not a United States citizen.
2    Klaus Zumwinkel is a German citizen and not a United States citizen.
*    Director