SAN FRANCISCO -- The federal government on Friday settled a lawsuit that accused two U.S. agencies of financing energy projects overseas without considering their impacts on global warming.

The Export-Import Bank of the United States and the Overseas Private Investment Corp. agreed to provide a combined $500 million in financing for renewable energy projects and take into account greenhouse gas emissions associated with projects they support.

The lawsuit was originally filed in San Francisco federal court in 2002 by Friends of the Earth, Greenpeace and four cities that claimed they would suffer environmental and economic damage from global climate change.

"This settlement is a substantial victory for our climate," said Michelle Chan, senior policy analyst at Friends of the Earth. "It will force federal agencies to move away from fossil fuel projects and account for the climate impacts of their lending."

The U.S. Department of Justice, which represented to the two agencies, did not immediately respond to requests for comment.

The plaintiffs alleged the two agencies provided more than $32 billion in financing and loan guarantees for fossil fuel projects over 10 years without studying their impact on global warming or the environment as required by the National Environmental Policy Act.

The projects included a coal-fired power plant in China; a pipeline from Chad to Cameroon; and oil and natural gas projects in Russia, Mexico, Venezuela and Indonesia. Many of the projects are well under way or already completed.

In the lawsuit, the four cities -- Boulder, Colo., and the California cities of Arcata, Oakland and Santa Monica -- claimed they would feel the environmental impacts of those faraway projects. Oakland argued its airport next to San Francisco Bay could be damaged by sea-level rise associated with global warming, while Boulder claimed warmer temperatures could affect the snowpack it relies on for its water supplies.

The Bush administration had argued that the "alleged impacts of global climate change are too remote and speculative" to require the environmental reviews sought by the plaintiffs. It also argued that the two agencies are exempt from NEPA.

The settlement filed Friday was reached after a federal judge rejected those arguments and ordered the parties to negotiate an agreement.

Under the settlement, the Export-Import Bank, which provides loan guarantees and other financing for overseas projects by U.S. companies, agreed to develop a greenhouse gas policy and start considering carbon dioxide emissions when evaluating fossil fuel projects for investment.

The Overseas Private Investment Corp., which supports American investment in developing countries, agreed to set a goal of reducing by 20 percent the greenhouse gas emissions associated with projects it supports.

Each organization agreed to provide at least $250 million in financing for renewable energy projects abroad.