RI–US ART Agreement Risks Deepening Indonesia's Dependence on Fossil Fuel Energy

Executive Director of the Center of Economic and Law Studies (Celios), Bhima Yudhistira Adhinegara, said that the plan to ratify the Agreement on Reciprocal Trade (ART) between Indonesia and the United States could deepen Indonesia’s dependence on fossil fuels. The agreement is feared to create fossil fuel lock-in or energy policy lock-in toward fossil fuels such as oil and natural gas in the midst of an urgent need to accelerate the transition to clean energy. “Firstly, on fossil fuel lock-in, we will continue to rely on oil and gas, especially given the current Middle East conflict. This should be a moment to rethink whether we should keep importing, so that Indonesia’s economy remains dependent on BBM (fuel oil).” Bhima said during an online discussion entitled “Assessing the Impact of the RI-US Trade Agreement: Broadening Opportunities or Narrowing Sovereignty over Natural Resources, Food & the Energy Transition,” on Thursday (5 March 2026). He assessed that global geopolitics should be a momentum for Indonesia to reduce dependence on imported fuel oil, not strengthen it. According to Bhima, Indonesia is currently a net oil importer with relatively limited BBM reserves. He noted that the national energy stock resilience is only about 20 days, so any disruption to global supply could directly trigger domestic instability. In several regions, signs of supply pressure have already appeared. Bhima cited queues at fuel stations in Aceh that began to form ahead of Ramadan and the Eid al-Fitr travel period. This phenomenon demonstrates the vulnerability of the national energy system, which remains heavily dependent on imported BBM. Against this backdrop, the government is reportedly considering increasing energy imports through the ART framework. Bhima said the value of planned oil and gas imports could reach around Rp 253 trillion, including crude oil and liquefied petroleum gas (LPG). He argued that the policy would not only raise energy dependence but could also increase costs. If Indonesia imports oil from the United States, the price reaching the domestic market is expected to be higher than imports from Singapore. “If we are importing oil from both, the price difference could be two to six US dollars per barrel compared with importing from Singapore,” Bhima said. He explained that the price difference arises from added logistics, insurance, and various shipping components. The impact would be felt directly by PT Pertamina as the state-owned enterprise responsible for distributing BBM nationally. Bhima estimated that this cost difference could reach about Rp 11 trillion per year for Pertamina. This additional burden could ultimately raise the country’s subsidy and energy compensation requirements. “This agreement could trigger losses in terms of subsidy costs and BBM compensation that are far higher,” he said. In addition to strengthening dependence on fossil energy, Bhima warned against policy narratives that could divert the energy transition. He noted calls to increase the biodiesel blend as a solution to the energy crisis, instead of accelerating electrification of transport and power generation. According to Bhima, such a strategy risks triggering new environmental impacts. Expanding palm oil plantations to meet biodiesel demand could accelerate deforestation and land-use conflicts. He cited the revocation of palm oil company licences following environmental disasters in Sumatra as an example of ecological problems that commodity expansion can cause. If biodiesel policy continues to expand, pressure on forests is expected to rise. “Not that we are practicing ecological repentance, but with this ART we face a double hit. Oil imports will continue, while biodiesel and bioethanol blending are also being promoted,” he said. Bhima also highlighted the potential expansion of bioethanol projects that could trigger new land clearing, especially in Merauke. Under the trade cooperation framework, the United States would push Indonesia to import corn-based bioethanol while also increasing the domestic bioethanol blend to 10 per cent by 2030.