Owing to the pressures of decreasing CO2 emissions and establishing a sustainable environment, many nations have set specific goals for conserving energy and reducing CO2 emissions. Governments have implemented various policies to achieve these goals. The assessment of policies that can effectively lead to energy conservation and CO2 reductions is becoming a critical issue. Hence, the aim of this paper is to develop an assessment model that can be used to predict the achievement of policy objectives. In this paper, a brief introduction of the background and the fundamentals of the grey model are presented. This is followed by a report on the application of the grey model to predict the achievement of Taiwan's subsidy policy. This paper uses data on Taiwan's solar water heater coverage area for the subsidized period (2001-2009) to assess the achievement of the subsidy policy. Taiwan has set a policy objective of covering an area of six million m2 by 2020. Considering Taiwan's achievement from 1978 to 2009, representing a completion of 32 percent, the coverage is predicted to increase to 62 percent during the period from 2010 to 2020. Further, since China's coverage area for solar water heaters is the world's largest, this study also uses the grey model to predict its achievement of policy objectives to provide a comparison with reference to Taiwan. It is predicted that by 2020, China's achievement will reach 124 percent of its policy objectives. Compared to China's achievement, Taiwan's prediction shows that the current policy will fail to achieve its objectives. Therefore, early prediction may provide Taiwan's decision makers with a reference for an early response.