World electricity co-operation

This thesis evaluates the effect of electricity co-operation regarding import and export on electricity prices for OECD countries and on CO2 emissions for the world. In addition, the study investigates which kinds of renewable energies provide the best economic future for Canada and the U.S. There are three main sections to the thesis. Firstly, panel data analysis determines the electricity price functions, using 29 OECD countries’ yearly data from 1980 to 2007. Membership of the European Union, used to investigate effect of high level co-operation on price, is seen to decrease household and industry prices, but is not significant for household price. The effect of electricity trading in OECD countries is not found to deliver cheaper electricity suggesting that these countries need to co-operate more closely to increase competition and improve efficiency in electricity markets. Secondly, panel data analysis determines parameters of the CO2 emissions function, using 131 countries’ yearly data from 1971 to 2007. The world results show that electricity co-operation is highly significant in decreasing CO2 emissions per unit of generation, thus supporting the hypothesis. At the continent level, Asia shows the highest CO2 decrease from electricity import, with the lowest decrease being for Africa. Electricity export for North America, Latin America and Europe is found to be highly significant in decreasing CO2 emissions. Finally, time series analysis of yearly data for Canada and the U.S. from 1978 to 2009 is used to determine the electricity price functions. For Canada, electricity import is found to be highly significant in decreasing household electricity price, but not so for the U.S. Renewable energies such as wind and hydro are seen to be the future of electricity generation for Canada, but the results for the U.S. indicate that no type of renewable energy can reduce electricity price.