The human body's source of energy for all metabolic activity is ultimately adenosine-tri-phosphate (ATP). It's ATP that provides the energy for muscle contraction, breathing, even thinking. The body must generate ATP. For some reason, a lot of people think that you must have glycogen from carbohydrates to produce and replenish ATP. Well, that's what I thought too until I delved a bit further into ATP replenishment. Protein and fat, ironically, have their own mechanism for providing the body energy! Although in the long-run it's true, in the short-run, you can go on less carbs than recommended and still function. In fact, when the bulk of your diet is carbs, you basically burn the glucose from those carbs to maintain the body. Glucose in the bloodstream and insulin is secreted by the pancreas is utilized for immediate energy, otherwise it is converted in the liver and muscles to glycogen and stored. Whatever portion of glucose is not stored as glycogen is converted into triglycerides (fat). The stored glycogen is used for energy when it is converted back to glucose so that cells can directly use it and it can be transported through the bloodstream to other parts of the body where cells need energy.

Here's the interesting part: you actually don't need to have large stores of glycogen or glucose readily available for energy when fat makes up the bulk of your diet rather than carbohydrates. Where does this energy come from? The majority of it comes from its breakdown of free fatty acids in the diet and stored fat on the body. Rather than burning the stored glycogen and glucose for energy, you will be burning free fatty acids, triglycerides, and body fat!

Essentially, a high fat diet (combined with the restriction of carbohydrates) causes lipolytic (fat burning) enzymes in the body to become active and decreases the activity of the lipogenic (fat producing) enzymes. Now the body has converted from a carb-burner to a fat-burner. Fat is now the body's main energy source...and a very good source too. What happens is triglycerides are broken down to free fatty acids and then to ketones. Ketones are great energy source for the body's cells. Fatty free acids make up for the absence of glucose, while triglycerides take the place of glycogen.

You see, when carbs are the main source of the body's energy, the pancreas must produce quantities of insulin to process it and store it. However, one of the problems with insulin is it's lipgenic factor. It causes the body to want to store fat. The increased storing of body fat and decrease in the amount of burned fat can cause being fat...go figure. To reduce this, you've got to shock your body a little. This diet can work if done correctly, but by no means is it a diet for the long run.

Obviously the flip-flop side of the coin is better...this is what occurs on the high fat diet. It's better for your body to be forced to burn a higher octane fuel to meet it's energy requirements...excess fat. As long as you eat consistently and even cut down on all the simple carbs, you will benefit.

The effect this can have on bodyfat is somewhat overwhelming, as the research has now begun to pour in, documenting this effect. One study of people at ideal weight found that high fat diets were very lipolytic or fat burning.
Kather H, Wieland E, Scheurer A, et al. Influences of variation in total energy intake and dietary consumption on regulation of fat cell lipolysis in ideal weight subjects. J Clin Invest 1987; 80(2):556-72.

Another study focusing on people considered obese found that when they ate a low carb/relatively high fat diet vs. a high carb/relatively low fat diet they lost a signifigantly greater amount of fat.
Rabast U, Kasper H, Schonborn J. Comparative studies in obese subjects fed carbohydrate-restricted and high carbohydrate diets. Nutr Metab 1978; 22(5): 269-77

I know it goes against conventional logic, but evidence suggests that's the way it works! After adapting to this diet, you'll see that fat does not necessarily beget fat. Only if you're carb intake remains high, will the increased fat intake be detrimental.

Studies conducted on animals have produced additional results worth looking into. One study in particular that sticks out involved hamsters. It found that fat build up decreased on a high fat diet, even though weight increased. The weight increase was mostly in lean muscle mass.
Sandretto AM, Tsai AC. Effects of fat intake on body composition and hepatic lipogenic enzyme activities of hamsters shortly after exercise cessation. Amer J Clin Nutr 1988; 47(2): 1175-9.

In different study showed that hamsters which ate a high fat diet had lower amounts of lipogenic enzymes and less body fat content overall than low-fat-fed hamsters who ate more carbs under both exercise and sedentary conditions.(ref 4)
Tsai AC, Gong TW. Modulation of the exercise and retirement effects by dietary fat intake in hamsters. J Nutr 1987; 117(6): 1149-53

The latter study raises an interesting question...why the increased gain in lean muscle mass? A beneficial by-product of the "metabolic shift" going from a high carb diet to a high fat diet, as it turns out, is that fat becomes protein's champion in the body. When your body's used to utilizing carbs as its main energy supply, the body will take muscle protein, break it down, and use it to form glucose (gluconeogenesis). Once the stores are exhausted, this becomes the body's energy supply. Catabolism (muscle breakdown) occurs. OUCH! You're body's basically eating away at your muscles to fuel your workouts....Nooooo!

With the high fat (anabolic) diet, on the other hand, you won't experience near that amount of catabolism. The fat that is available will serve as the perfect alternative to breaking down muscles for energy to a much greater degree.

Basically anytime you're working out and your body needs energy, it will do what it has to do to get supply the energy it needs...including breakdown muscle. One way bodybuilders combat this issue is to sip energy drinks full of glucose during their workouts. Now the body won't have to destroy muscle for energy, as the glucose provides another source constantly coming in. When you're on a high fat diet, the fat works in the same way as the glucose. Protecting the muscle, the fat is a great alternative, and a powerful source of energy.

Remember, that along with muscle building (anabolism), a bodybuilder must be wary of catabolism. According to research, the anabolic diet could just as easily be named the anti-catabolic diet. Besides using the body's hormones to your advantage, you'll burn fat better, gain more lean muscle mass, and decrease the amount of catabolism that occurs.

Research proves that the ketone bodies burned for energy in the anabolic diet actually decrease the catabolism of protein.
Giorski J. Muscle triglyceride metabolism during exercise. Cna J Phys Pharm 1992; 70(1):123-31.