Indonesia's 2026 Fire Crisis: El Niño, Human Activity, and What It Means for Carbon Credits

Indonesia is facing one of its worst fire seasons in a decade. Here's what the data says about what's really driving it and why it's putting the credibility of forest carbon credits on the line.

2026 has turned into a landmark year for Indonesia's forests — for all the wrong reasons. From January through July alone, fires burned an estimated 202,000 hectares of land across the archipelago, according to satellite tracking by Fire Emissions Watch. Carbon emissions from those fires had already reached 12.82 megatons by early September — nearly 100 times more than what was emitted from wildfires across the entire previous year.

Scientists tracking the numbers say the trajectory closely mirrors 2015, the year a "super" El Niño triggered fires that burned roughly 2.6 million hectares, cost Indonesia an estimated $28 billion in damages, and may have contributed to around 100,000 premature deaths across Indonesia, Malaysia, and Singapore from smoke exposure. Researchers monitoring this year's fires say the scale so far is tracking at, or slightly above, that historic benchmark.

The honest answer is: both, and they're impossible to separate.

El Niño is a naturally occurring climate pattern, driven by warming ocean temperatures in the Pacific. In Indonesia, it typically arrives with a compound effect: a positive Indian Ocean Dipole pushes rain clouds away from the archipelago toward the Pacific, leading to an extended, unusually dry season. Indonesia's meteorological agency, BMKG, had flagged a real chance of a moderate-to-strong El Niño developing through 2026, and by mid-year conditions were already drawing comparisons to the catastrophic 2015 season.

But El Niño doesn't burn forests on its own. It simply creates the dry, drought-stressed conditions that turn a landscape already altered by decades of human activity into a tinderbox. The real accelerant is what has happened to Indonesia's peatlands.

Tropical peatlands store carbon accumulated over thousands of years in some cases, up to 20 times more carbon per hectare than typical mineral soils. In their natural, waterlogged state, they don't burn. But large areas of Indonesian peatland have been drained over decades to make way for agriculture and plantations, lowering the water table and leaving the peat dry, degraded, and extremely flammable. Indonesia's Ministry of Forestry reported that roughly half of all fire-affected areas in 2026 were located on peatland. When these degraded peat soils ignite, they don't just burn the vegetation on top, they smolder underground for weeks or months, releasing enormous volumes of stored carbon that would otherwise have stayed locked away.

In other words: El Niño lights the match, but decades of land-use change built the fuel.

Indonesia has positioned its vast forest and peatland landscapes as a cornerstone of its carbon market strategy — a way to attract climate finance by selling credits tied to avoided deforestation and peatland restoration (REDD+ projects). But this year's fires are exposing exactly why that strategy is under such intense scrutiny.

Carbon credits from forest and peatland projects rely on a promise of permanence — the idea that the carbon being protected today will stay out of the atmosphere for decades to come. Fires are the single biggest threat to that promise. When a peatland restoration project burns, some or all of the emissions reductions it was credited for can be wiped out in days, regardless of how well-designed the project was on paper.

This isn't a hypothetical concern. Critics attending Indonesia's carbon market push at COP30 pointed directly to ongoing forest and peatland fires as evidence undermining the country's ability to guarantee the integrity of its forest-based credits. Independent rating agencies now build permanence risk explicitly into how they score Indonesian nature-based projects, and registries require projects to set aside a share of issued credits into "buffer pools" specifically to cover losses from fire and other disturbance events.

The lesson from this fire season is clear: a carbon credit is only as credible as the monitoring system standing behind it. Static baselines and periodic satellite snapshots aren't enough to reassure buyers when fire risk can wipe out years of protected carbon in a single dry season.

This is precisely the problem TREEO's technology is built to solve. Instead of relying on broad regional estimates, TREEO's digital Measurement, Reporting, and Verification (dMRV) system tracks carbon stock at the individual tree level, continuously, through our real-time Dashboard. That means:

• Faster detection of risk — granular, ongoing monitoring makes it possible to spot forest stress or degradation trends long before a fire season turns catastrophic, rather than discovering the damage months later in an annual report.
• Verifiable, defensible carbon accounting — when carbon stock is measured tree by tree rather than estimated from a sample plot, project developers and buyers have a far more precise baseline to assess what was actually lost — or protected.
• Stronger buffer pool and permanence planning — accurate, continuous data helps projects size their risk buffers appropriately and respond to disturbance events with real numbers, not guesswork.

As Indonesia's carbon market works to rebuild trust after a fire season this severe, the projects that will hold their value are the ones that can prove — with real, tree-level data — exactly what they protected, and what they didn't.