On February 20, Indonesia and the United States finalized a new trade agreement, allocating US$15 billion specifically for fossil fuel imports. The deal is part of the broader US “Energy Dominance Agenda,” which seeks to expand domestic fossil fuel production and boost global exports. The Indonesia-US Reciprocal Trade Agreement covers a large share of Indonesia’s current energy imports, including oil, liquefied petroleum gas, and metallurgical coal, while promoting US investment in Indonesia’s mining sector, reflecting similar arrangements recently made in the Democratic Republic of Congo and other countries.
Environmental experts have raised concerns that the agreement undermines Indonesia’s international climate and human rights commitments. Atina Rizqiana of CELIOS, a Jakarta-based research group, stated that the deal is “a significant setback in the energy transition agenda.” The provisions encouraging fossil fuel imports conflict with earlier commitments under the $20 billion Just Energy Transition Partnership, which was designed to help Indonesia phase out coal, even as the government has approved expansions in coal generation capacity.
The agreement also coincides with Southeast Asian countries, including Indonesia, expanding their Liquefied Natural Gas (LNG) infrastructure. Increased foreign investor involvement in LNG projects may lock Indonesia into long-term fossil fuel dependence. Meanwhile, the government has made limited progress in promoting renewable energy for electricity generation and mineral processing, and has not adequately addressed human rights abuses affecting communities near coal mines and nickel smelters.
US and Indonesian companies involved in the agreement face human rights due diligence risks, particularly in the nickel sector, where documented abuses persist. Additionally, US metallurgical coal exports carry environmental and human costs, compounded by US deregulation under previous administrations that rolled back key climate and public health protections.
Experts caution that countries entering energy agreements with the US should consider the broader implications. The trade deal risks undermining Indonesia’s credibility on climate action and human rights, while potentially diverting financial resources away from a safe and equitable energy transition.
