This chapter examines the repercussions of Mexico’s national austerity policy on climate governance, focusing on the dismantling of the National Institute of Ecology and Climate Change (INECC) in 2021. INECC, a decentralized agency with legal and policy autonomy, played a pivotal role in shaping national and subnational climate policy through research, coordination, and capacity-building. Its dissolution—under the rationale of streamlining government functions—resulted in severe budget cuts, staff reductions, and the disruption of climate programs, particularly in regions like Tabasco. Despite possessing a robust legal framework for environmental protection, Tabasco’s reliance on oil extraction and institutional instability has hindered the operationalization of climate policies. Drawing on documentary analysis and institutional theory, this case study reveals how the weakening of policy autonomy undermines environmental governance, climate adaptation, and regional resilience. The chapter argues that the dismantling of INECC not only disrupted Mexico’s National System on Climate Change (SINACC) but also intensified the disconnect between federal commitments and local action. It concludes by highlighting the urgent need for rebuilding decentralized and autonomous climate institutions, particularly under the incoming federal administration, to meet national and international sustainability goals.