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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 can be used as solid fuel in Peat-fired Engines. When burnt in such an engine, it produces Ash which can then be used to create Fertilizer or Compost. It can also be used to craft Bituminous Peat, an even more powerful fuel. Peat will burn very slowly. A single Peat Bog should produce enough fuel to keep many Peat-fired Engines running.
Apart from fueling Peat-fired Engines, peat can also be used as a powerful substitute in Steam Engines and Furnaces, however, these devices will not produce Ash as a by-product.