BRUDENELL, Prince Edward Island – Maine Gov. John Baldacci and New Brunswick Premier Shawn Graham vowed Tuesday to continue moving forward in exploring options for cooperation on expanding power production and electrical interconnections.

The two leaders released a report that concluded significant economic and environmental benefits are possible through closer coordination.

“This report confirms what Premier Graham and I thought when we began this process,” Baldacci said. “Maine and New Brunswick have much to gain from closer cooperation. And while there will be challenges, none of them are insurmountable.”

The two discussed the report before Baldacci departed the meeting of New England governors and eastern Canadian premiers to return to Maine for the funeral of Sgt. Richard K. Parker, 26, of Phillips, a Maine Army National Guard soldier who was killed earlier this month in Iraq.

Maine has been looking at the possibility of leaving the New England power grid and establishing power-swapping arrangements with neighboring provinces in Canada. Because of inequities, Baldacci said he felt compelled to look to neighbors to the north.

In February, Baldacci and Graham signed a memorandum of understanding that lays out a timeline for cooperation. The 30-page report that was released on Tuesday represented Phase I of the memorandum identifying the potential for new power generation, market opportunities and potential obstacles.

The report said “there do not appear to be insurmountable obstacles to achieving substantial benefits” for both Maine and New Brunswick.

“This is an important step in growing a partnership with our neighbors in New Brunswick to provide for efficient production and transmission of electricity and for doing so in a way that protects our environment,” Baldacci said.

A Phase II report, due this fall, will analyze the feasibility and challenges of specific approaches, officials said.

Tuesday’s report came on the final day of meetings in which Canadian premiers and New England governors said they will look more closely at developing a regional system for capping and trading greenhouse gas emissions.

The premiers and governors say they are moving toward a common market in energy and will have to find ways to share emission targets as well as power and transmission costs.

Graham said he will host a workshop on the potential for developing a regional cap-and-trade program. It represented something of an about-face for the New Brunswick premier who indicated earlier he wasn’t interested in such an approach.

The system involves setting caps for industrial emissions and allowing large polluters to buy credits from companies that have an easier time meeting emission limits.

Quebec Premier Jean Charest says a cap-and-trade program is inevitable, so the premiers and governors should take the lead on developing a system.

The five premiers and six governors will meet again next summer in Portland, Maine.