Colossal fossil BP is moving to downgrade the value of its assets by up to US$17.5 billion, after scaling back its estimate of future oil and gas prices and projecting that the coronavirus pandemic will produce a permanent drop in fossil demand, while accelerating the shift to carbon-free energy.

“In an announcement sending shock waves through the oil industry and rattling global stock markets, BP said it was not only downgrading its own value but, as part of a review of the company’s activities, it was also rethinking future exploration plans, hinting at leaving some of its worldwide fossil fuel investments in the ground,” Climate News Network reports. “BP says the main reason for its action is the COVID pandemic—energy demand is slack, and oil prices will likely remain at their present relatively low level for years to come. But the company also acknowledges its revaluation is a reflection of moves towards a low-carbon future.”

The announcement “comes as Chief Executive Bernard Looney prepares to outline his strategy in September to ‘reinvent’ BP, including a reduced focus on oil and gas and a larger renewables business,” Reuters notes. It also means the company’s 10.6% dividend to shareholders, one of the largest available from Big Oil, “is looking increasingly untenable after the company said it would make the biggest writedown on its business since the devastating Macondo oil spill a decade ago,” BNN Bloomberg adds.

BP cut its estimate of benchmark oil prices in Europe through 2050 by about 30%, from $70 to $55 per barrel, and now projects carbon prices at $100 per tonne in 2030, a sharp increase from its previous estimate of $40. It shares fell about 2.2% in response to the announcement.

The company statement largely blamed the downgrade on the economic impacts of the pandemic, predicting that the aftermath would see faster progress toward the carbon reduction targets in the 2015 Paris Agreement. “We have reset our price outlook to reflect that impact and the likelihood of greater efforts to ‘build back better’ towards a Paris-consistent world,” Looney said. Last week, the company cut about 10,000 employees, about 15% of its work force, in response to the pandemic and as a prelude to Looney’s transition strategy.

Under the new price assumptions, Reuters says BP will abandon $8 to $10 billion out of the $14.2 billion in early-stage oil and gas exploration projects it had under way as of late March. The London-based fossil will also dump $8 to $11 billion worth of “producing assets”, out of a total inventory worth $130 billion. It still plans to replace much of its oil production with gas, even though it projects U.S. gas prices falling by 31%.

The announcement comes as investors “have increased pressure on oil companies to lower carbon emissions to net zero by the end of the century,” Reuters notes. “BP and its European rivals have in recent months outlined plans to sharply reduce their emissions by 2050, although how exactly they will get there remains unclear.”

Greenpeace UK Senior Climate Adviser Charles Kronick said the price adjustment was “long overdue”, adding that “accelerating the switch to renewable energy will be vital not only to the climate but to any oil company hoping to survive in a zero-carbon future”.

“It has finally dawned on BP that the climate emergency is going to make oil worth less,” Greenpeace added in a statement. “BP must protect its work force and offer training to help people move into sustainable jobs in decommissioning and offshore wind.”

“Something like this has been long overdue from BP,” said CMC Markets analyst Michael Hewson. “Having seen its sector peer Royal Dutch Shell bite the bullet and cut its dividend a few weeks ago, it would appear that BP is likely to have to follow suit if it wants to reduce its already high debt levels and shore up its balance sheet for the new challenges ahead.”

“This is the energy transition happening,” said Warwick Business School energy specialist David Elmes. ”The question is who can do it and how fast they can do it.” While the company formerly known as Dong (Danish Oil and Natural Gas) has since re-emerged as Ørsted, a world-class offshore wind supplier, other fossils are now having to shift faster than they’d planned at a time when their profits are being squeezed.

“Other European firms like Shell, Total, and Repsol have declared similar ambitions to BP,” Elmes told The Canadian Press. ”But low prices mean many are struggling.”

Bloomberg News says the announcement shows how the pandemic “has exposed the fragility of some of the world’s biggest oil and gas companies, but also given them the opportunity to make investors swallow some unpleasant remedies.” Its coverage cites Thomas Hayes, managing member at investment management firm Great Hill Capital LLC, concluding that the announcement “‘kitchen sinks’ it, so that long-term investors can step in with much of the worst in the rear-view mirror.”

But BBC environment analyst Roger Harrabin said the “ramifications for the climate are potentially very significant. Experts have been warning for years that firms have already discovered far more oil than we can afford to burn if we want to protect the climate,” and “this [announcement], in part, is a reflection of that new reality. We’ll see how other firms respond.”

“The oil majors have known the impact of their activities on the climate for decades but, in the pursuit of profits, chose to ignore reality,” Climate News Network notes. “Multi-million-dollar public relations campaigns have ‘greenwashed’ their operations—and deliberately misinformed the public.”

For its part, BP “has emphasized its green credentials, making a commitment to tackling climate change and, at one stage, labelling itself as a ‘beyond petroleum’ company,” adds founding editor Kieran Cooke. But that all came to a screeching halt after the Deepwater Horizon disaster in 2010.