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U.S. lawmakers extended support for wind projects and biodiesel production in last week’s ‘fiscal cliff’ bill.Tim Fraser/The Globe and Mail

Some Canadian renewable energy companies with activities in the United States will be among those benefiting from U.S. "fiscal cliff" legislation that extended crucial tax credits for wind energy and biodiesel production.

As well as staving off immediate tax hikes on Americans, the law passed last week by U.S. legislators included a provision to extend for one more year a series of renewable energy tax breaks that were to expire at the end of 2012.

The most important of these is a subsidy of 2.2-cent-per-kilowatt hour for wind projects, a crucial support that the wind power business had been lobbying fiercely to maintain. But the law also extended support for biodiesel, some forms of ethanol, and some electric vehicles.

For Vancouver-based Western Wind Energy Corp., the extension of the wind tax credit is a boon on several fronts. The company has a number of projects in the works in the United States, and the support "adds deep value to our development pipeline," said president Jeff Ciachurski, who is in the process of selling the company.

At the same time, Western Wind is also trying to fend off a hostile November takeover bid from Brookfield Renewable Energy Partners, saying the Toronto-based company's $2.50 per share offer is too low. Brookfield's bid, Mr. Ciachurski said, did not "include the assumption that the wind tax credits would ever be extended," so Western's assets need to be re-evaluated to include their "full development potential."

For Biox Corp., a Toronto company that owns a large biodiesel facility in Hamilton, Ont., and exports most of the production to the United States, the extension of biodiesel tax incentives will have an immediate impact on its bottom line. That's because the new U.S. law also made the biofuel credit retroactive to January, 2012, and thus will allow Biox to collect $7-million in "contingent revenue" for biodiesel it sold during 2012.

More broadly, the extension of the $1-per-gallon biodiesel tax credit "provides more clarity and stability for the industry in general," said Biox chief financial officer Chris Clinning. The uncertainty surrounding the tax credit was very disruptive, he said, because neither consumers nor suppliers of biodiesel knew the actual pricing and value of the product.

Still, he said, it would be very helpful if the United States were more consistent in its support programs so the renewable energy industry could plan for the longer term. The U.S. government's "on again and off again" approach to tax incentives for renewables has been disruptive, because several times in the past decades it has let credits expire, then started them up again.

Because of last year's worries about whether the wind production tax credit would be renewed, many U.S. wind developers currently have projects in their pipelines for 2013. Companies were loathe to plan new wind farms when they didn't know if the tax credits would continue. Consequently, several manufacturers of wind turbines and associated hardware cut back or closed plants, and laid off workers.

Robert Hornung, president of the Canadian Wind Energy Association, said only a few Canadian companies will see direct benefits from a resurgence in the U.S. wind business, but more broadly there will be a more optimistic "tone" across the whole continent's wind power supply chain. "The Canadian market is best served when there is a healthy U.S. market," he said.

Even those companies that don't benefit directly, because they don't have U.S. sales or operations, will gain from the sense of relief that has washed over the entire renewable energy sector in North America since Jan. 1, Mr. Hornung said.