Hydrogen is a clean energy carrier, which used in highly efficient energy conversion technologies such as fuel cells, has the potential to satisfy many of our future energy needs in a sustainable way. The water-gas shift (WGS) reaction (CO + H2O --> H2 + CO2) is a critical process in providing pure hydrogen for catalytic processes in the chemical industry and fuel cells. Nevertheless, the design and optimization of WGS catalysts depends on a better basic understanding of catalyst structure and function. New generation WGS catalysts are base on metal-oxide bifunctional systems with the metal and oxide catalyzing different parts of the reaction. The aim of this project is precisely to understand and optimize the performance of the metal and oxide phases in order to develop the ability to predict, and ultimately design, improved cost-effective WGS catalysts. To this end, we propose to create models for these catalysts and apply state-of-the-art computational chemistry methods. We will apply first principles calculations to understand the nature of the active sites in each component of the catalysts and determine how they interact with the reactants and possible intermediates of the WGS reaction. We will be able to establish why metal particle size matters for this reaction and why some metals or oxides are better than others. Calculations will be performed for catalysts that have been studied in detail by our experimental colleagues, making them more meaningful. Theory will not only be used for the explanation of experimental data, but also for pre-screening the behavior of catalysts. Overall, our approach will develop basic principles for the rational design and optimization of WGS nanocatalysts vital for the production of clean hydrogen. These studies will contribute to the long-term goal of the EU of developing new concepts for a better use of chemical processes and materials associated with energy-related problems.