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The aim of this paper is to analyze students' chemical literacy through implementing an Ethical Dilemma-STEAM teaching model in chemistry acid and base lessons. The model is designed to engage students in values-based learning through dilemma stories that pose environmental problems to be solved through the development of an interdisciplinary project. The study involved 40 grade 11 students from a high school in Jakarta, Indonesia, during the 2021/2022 academic year. A qualitative research method was employed to investigate students' learning experiences through classroom observations, semi-structured interviews, reflective journals, and a chemical literacy test. The model engaged students through five steps of learning: value reflection, problem-solving and decision-making, content integration, STEAM integration, and transformation. In this study students were challenged to develop a jet-powered boat as a solution to an inter-island mobility dilemma. The study found that the Ethical Dilemma-STEAM teaching model supported students' chemical literacy development. The study demonstrated that students were encouraged to think critically by applying their conceptual understanding to practice. They were motivated to look closely at chemistry issues in everyday life, an indication that this model could be used as an alternative way to engage students to see the relevance of chemistry concepts and their application to the local environment. The paper also addresses the difficulties researchers faced in implementing an innovative approach to chemistry education during multiple COVID-19 outbreaks. [ABSTRACT FROM AUTHOR]