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Peat is a solid fuel produced by leaving Bog Earth to mature within 1 block of water (including diagonals). A peat farm can also be built and maintained automatically by a Peat Bog, while a Turbary takes care of harvesting. Peat is used as solid fuel in peat-fired engines, providing 1 MJ/t for 5000 ticks. It's combustion in such an engine produces Ash at a rate of one per 1.5 peat, which can then be used to craft Fertilizer, Manure, or Bituminous Peat.
Peat will burn very slowly. A single peat bog should produce enough fuel to keep as many as 10 peat-fired engines running.
Apart from fueling peat-fired engines, peat can also be used as a powerful substitute in furnaces smelting 20 items each. In this respect, it is to be noted that, despite peat being a lesser engine fuel than bituminous peat, the latter can't be used as furnace fuel. Also note that, when used as furnace fuel, no ash is produced.
If you have IC2 installed you can also put Peat into a Generator to give you 4K EUs. That's 256K EU for a whole stack of peat.