El Niño: Indonesia fire emissions in 2026 ‘on track’ to match record for this century

Nature & Climate Perspective

**Catastrophic peatland and forest fires driven by El Niño threaten massive ecological disruption and systemic reversal of terrestrial carbon stocks across Southeast Asia. **

• Severe degradation of ancient peat-swamp habitats leads to catastrophic biodiversity loss, severely endangering critical endemic flora and fauna.
• The combustion of subterranean, carbon-dense peat soils converts primary LULUCF sinks into massive net-positive greenhouse gas sources, accelerating atmospheric feedback loops.
• Widespread forest canopy loss impairs regional hydrological cycles and water retention capacity, compromising long-term environmental stability and accelerating land subsidence.

Market & Policy Outlook

**Surging wildfire-induced reversals directly compromise ICVCM Core Carbon Principle permanence criteria, threatening voluntary market liquidity and Article 6 integration. **

• National emission surges complicate Indonesia's NDC attainment, threatening bilateral ITMO arrangements under Article 6.2 and complicating the pipeline for Article 6.4 crediting.
• Extreme permanence vulnerabilities test the solvency of registry buffer pools, creating severe pricing discounts and widening risk premiums for nature-based forestry and peatland offsets.
• Corporate entities relying on regional forestry credits for SBTi Beyond Value Chain Mitigation or carbon neutral claims face elevated regulatory scrutiny and balance sheet write-downs due to non-permanence exposure.