Steel’s Turquoise Gamble in Mexico

Tulum Energy secures $27 million to pilot methane pyrolysis in Mexico, turning natural gas into hydrogen and solid carbon for cleaner steel

16 Jul 2025

A new effort to decarbonize the steel industry is moving toward industrial-scale testing in Mexico, centered on a process that aims to bridge the gap between fossil fuels and emissions-free energy. Tulum Energy has raised $27 million to advance its methane pyrolysis technology, a method that produces "turquoise" hydrogen by splitting natural gas into hydrogen gas and solid carbon.

The process, which uses heat to break down methane, avoids the direct carbon dioxide emissions associated with traditional hydrogen production. Instead of venting greenhouse gases into the atmosphere, the system isolates carbon in a solid form, which analysts suggest could be repurposed for industrial use. This approach allows for the continued use of existing natural gas infrastructure while significantly lowering the carbon footprint of the final energy output.

Tulum Energy plans to demonstrate the technology at a pilot plant within the Ternium industrial complex in Pesquería, Mexico. The location is strategic; the steel sector is responsible for approximately 7 percent of global carbon emissions and remains among the most difficult industries to transition away from coal and gas. While "green" hydrogen produced from renewable electricity is often cited as the ultimate goal for the industry, its high cost and limited supply have led some officials to look toward turquoise hydrogen as a pragmatic intermediate step.

The scalability of the technology remains a point of debate among energy experts. The long-term economic viability of methane pyrolysis depends not only on the efficiency of the hydrogen production but also on the market demand for the solid carbon byproduct. Furthermore, as regulatory bodies in major markets move to certify what qualifies as truly low-carbon energy, the technology must meet increasingly stringent environmental standards to remain competitive against emerging alternatives.

Still, the project represents a growing trend of embedding decarbonization pilots directly within operating industrial sites. Such real-world demonstrations are considered essential by industry observers for assessing the performance and reliability of new hardware. If the pilot in Pesquería proves successful, the technology could offer a scalable blueprint for steelmakers facing mounting pressure from carbon pricing and tightening emissions regulations in the years ahead.