The North American Energy Standards Board's Wholesale Gas Quadrant Executive Committee recently voted to approve the proposed NAESB base contract for purchase and sale of hydrogen, a Canadian Addendum to the contract to support cross-border transactions, and a Frequently Asked Questions (FAQ) document intended to provide additional clarity around the contract’s use.
The endorsement is the culmination of a multi-year effort by the organization that began in 2022 when the NAESB Board of Directors first adopted a provisional annual plan item to consider the development of a standardized contract to support hydrogen transactions.
After support was expressed by the Department of Energy’s Office of the Under Secretary for Infrastructure in 2024, the Board activated the annual plan item, and over the course of the previous 15 months, the industry worked through the NAESB process to develop the draft contract.
It is expected to be ratified and available for industry use on November 24, 2025. In total, 122 individuals representing 93 different companies participated in the NAESB Wholesale Gas Quadrant (WGQ) Contracts Subcommittee meetings that ultimately led to the endorsement of the Hydrogen Contract.
Additionally, significant support was provided through contributions and comments submitted by a number of active companies in the hydrogen market through the Center for Houston’s Future Hydrogen Steering Committee and its leadership.
Keith Sappenfield, Chair of the NAESB WGQ Contracts Subcommittee stated, “We recognized that a standardized contract will be fundamental and necessary to accelerate a hydrogen market, and I am encouraged by the actions of the NAESB WGQ Executive Committee to endorse the Hydrogen Contract. I look forward to reviewing and updating the standardized contract as necessary to support the growth of this expanding market.”
NAESB said the Hydrogen Contract leverages a number of the industry accepted terms and conditions incorporated into existing NAESB standardized contracts, including the NAESB Base Contract for Sale and Purchase of Natural Gas, the NAESB Master Agreement for Purchase, Sale or Exchange of Liquid Hydrocarbons and the NAESB Certified Natural Gas Addendum.
"These terms and conditions are well understood within the industry and are intended to support some of the unique characteristics of future hydrogen transactions, such as environmental aspects and transportation. The draft also introduces some concepts and deal terms that are new to NAESB standardized contracts," NAESB said.
Specifically, the Hydrogen Contract includes optionality for bundled and unbundled transactions with energy attribute certificates that may be attached to the commodity to facilitate book and claim or trace and claim programs, similar to those used in the renewable energy certificate market. It also includes provisions for the identification of carbon intensity values of the commodity and the protocols that were selected to calculate these values to support transactions for hydrogen that may not fit within specific “color wheel” categories of hydrogen. These new terms and conditions are intended to provide a framework for deal structures that not only exist today but are expected to evolve in the future.
Michael Desselle, NAESB’s Chairman, stated, “In addition to traditional business practice standards that define the protocols for how transactions take place in the wholesale and retail natural gas and electricity markets, NAESB also hosts a number of industry tools, specifications, and standardized contracts that support the transactions underpinned by the business practice standards. These other products improve market efficiency and not only reduce transactional costs for the industry, and ultimately, the consumer, but also provide a level of stability and security that strengthens market functions. I am excited to include this new standardized contract into that suite of products, and I look forward to watching this nascent market grow.”
