Volkswagen AG will pay nearly $10.3 billion to settle claims stemming from its diesel emissions cheating scandal with U.S. regulators, a source briefed on the agreement said.

The settlement includes offers to buyback nearly 500,000 polluting U.S. vehicles and to set aside billions of dollars for green energy projects and a programme to offset excess diesel pollution, the source said.

Speaking on condition of anonymity, due to court-imposed gag rules, the source told Reuters the average compensation to owners was around $5,000. The settlement is currently valued at $10.287 billion in some settlement documents, the source added, saying final numbers could change before a Tuesday court deadline.

Volkswagen and the U.S. Environmental Protection Agency declined to comment.

There may be additional costs to VW disclosed on Tuesday, beyond the $10.3 billion figure, sources familiar with the matter said.

Reuters reported last week the initial VW settlement will not include civil penalties under the U.S. Clean Air Act or address about 80,000 larger 3.0 litre vehicles that emitted less pollution than the 2.0 litre vehicles.

The settlement also does not address lawsuits filed by U.S. states or investors or a criminal investigation by the Justice Department.

In April, U.S. District Judge Charles Breyer said the settlement will also include an offer to repair polluting vehicles if regulators approve it.

Regulators will not immediately approve fixes for the 2.0 litre vehicles - and may not approve fixes for all three generations of the polluting 2009-2015 vehicles, the sources told Reuters.