Mexico's ambitious pipeline aims to transform Yucatán's economy

A transformative energy project is set to reshape the region's economic landscape in the heart of Mexico's Yucatán Peninsula.

Beneath the crystalline waters of southeast Mexico, workers are installing a pipeline that President Claudia Sheinbaum hopes will drive economic growth and lift millions out of poverty. The $4.5 billion Southeast Gateway Project, expected to be completed next year, will transport up to 1.3 billion cubic feet of natural gas daily from Texas to the Yucatan Peninsula, powering plants and a planned transcontinental rail corridor intended to compete with the Panama Canal, Caliber.Az reports via foreign media.

However, this project, inherited from Sheinbaum's predecessor, Andres Manuel Lopez Obrador, poses a significant challenge to her goal of reducing Mexico's greenhouse gas emissions. The 715-kilometre (444-mile) pipeline, developed by Canada’s TC Energy Corp. in partnership with Mexico's state utility, is central to Sheinbaum’s strategy to diversify the Yucatan's economy. While tourist hotspots like Cancun and Playa del Carmen thrive, over half of the region's residents live on less than $16 a day.

The pipeline, which runs close to a delicate coral reef area, will also supply an oil refinery and support Lopez Obrador's Maya train initiative, thereby making Mexico more dependent on fossil fuels for years to come. This reliance complicates the country's commitments under the Paris Agreement to reduce carbon emissions by 35 per cent by 2030 and its target to cut methane emissions by 30 per cent within the same timeframe.

This dilemma lies at the core of Sheinbaum's vision for Mexico—and for any nation aiming to balance economic growth with a reduced carbon footprint. The urgency is heightened by her previous involvement with the United Nations Intergovernmental Panel on Climate Change, which has recently emphasized the necessity for substantial emissions reductions in the coming years. 

"Access to reliable energy is one of the most pressing issues in Southeastern Mexico, and this pipeline can help address that challenge," said Oscar Ocampo, an energy analyst at the nonprofit Mexican Institute for Competition. “However, it also ties Mexico to fossil fuels for a generation. Sheinbaum’s credibility on climate issues will hinge on her capacity to accelerate the development of renewable energy projects.”

Her strategy is centered around an ambitious goal to increase the share of electricity generated from clean sources—such as solar and wind—from 24 per cent today to 45 per cent by 2030. Achieving this will necessitate a significant overhaul of power grids, which have faced seasonal blackouts due to years of underinvestment. This effort could cost up to $50 billion, potentially marking the largest energy infrastructure expansion in a single presidential term in Mexico's history, leading some analysts to label the plan as a “pipe dream.” 

By Naila Huseynova