The case against Grants

Grants are used in the UK to promote renewable technologies, the market is not big enough so Grants by raising the demand increase the development of these technologies.
But Grant is not a neutral act in the economy, it's a transfer from the tax payer to the person who are gonna invest in these technologies - some would argue it's a transfer directly to the producer but it would be hard to argue that without any data-.

- Market distortion
The Grant are given to approved technology, these has the following consequences :
. Grant are running after the technology, post approving the development
. Innovator have incentive to stick to the approve technology, neglecting unforeseen development - it raise the cost of non mainstream development, because of the risk of not behind consider for a grant, and the red tape to be approve-.

- Unfairness
. Grant go to the people that can afford the installation, it's not the poorest. It's a transfer to the rich.
. It neglects effort by poor people that find other solution to the problem that are innovative but not technology related. e.g. If I save my 20% by turning the light off nobody is gonna give me money.

- Cost
. To finance Grant you need to raise taxes to finance the Grant and the allocation of the Grant.
. Taxe is always expensive, if you collect 1 it's gonna cost the economy 1.5
. Redtape to deal with the administration of approved technology, installer

- Evualation problem
. It's really hard to evaluate the impact of a Grant because you need to compare with what would have happen if the Grant was not implemented.

- Global renewable market
One can anyway ask the question of the effect of the Grant in one country when the markets are global.

So what do you do? The recommended solution is definitely taxes, - remember that anyway in grants you've got taxes-.
Taxes energy on their CO2 emission is probably the best way to achieve these goals
. it's non intrusive - only distort in the way we want it - and fair - if you use the collected money to compensate the poor family-.
. it's effect it's on all the national market, not only the technology preselected.
. it cost less than grants - no approver, distribution -.
. it's not easily corrupt by rent seeker.

The Pigou Club is a group of economist in favor of such tax in the USA.