Analysts highlight impact of US ethanol imports on energy security
Jakarta (ANTARA) — Putra Adhiguna, Managing Director of Energy Shift Institute, has cautioned that ethanol import clauses in the Agreement on Reciprocal Trade (ART) between Indonesia and the United States require careful scrutiny, particularly regarding their impact on energy security and the nation’s economic burden.
Under the trade agreement, Indonesia is obligated to ensure ethanol imports from the US exceed 1,000 metric tonnes annually. Indonesia is also prohibited from adopting policies that could obstruct the entry of US-sourced bioethanol.
Speaking to ANTARA in Jakarta on Wednesday, Putra acknowledged that imports are not inherently problematic if they merely substitute existing import volumes while remaining price-competitive. However, he cautioned against policies that stimulate new demand ultimately filled solely by imported products.
Putra questioned the urgency of the imports, noting that the previous government had expressed intentions to halt ethanol imports. He warned that if imported ethanol prices exceed domestic alternatives, the economic burden could increase substantially.
“US support for bioethanol contradicts the intention to reduce imports, and could instead increase the burden on the economy due to higher ethanol prices,” he stated.
Energy and Mineral Resources Minister Bahlil Lahadalia has previously indicated that the government is opening ethanol import opportunities, including from the United States, as part of clean energy development strategy. In a virtual press conference monitored from Jakarta on Friday (20 February), Bahlil stated: “We will blend petrol with ethanol on a mandatory basis, the aim is essentially to create new business opportunities within Indonesia.”
Bahlil further explained that the ethanol import option remains available as long as domestic production cannot satisfy national requirements. He characterised the import opportunity as running parallel to efforts to increase domestic energy production.
“Including imports from America, until such time as our domestic production needs are met, these efforts run in parallel,” he said.