Energy subsidies, mainly benefiting fossil fuels, were very large in the Czech Republic and the Slovak Republic in the 1990s, leading to serious economic and environmental problems. By holding back the restructuring of the economy and hindering innovation, energy subsidies are a primary cause of the high energy intensity that persists in both countries. They have also exacerbated the harmful environmental effects of energy production, supply and consumption, mainly through local and regional air pollution, including urban smog and acid rain. Land degradation due to mining activities is also a problem. Greenhouse gas emissions are also high relative to GDP, as a result of energy-intensive heavy industry and low energy efficiency compared to Western European countries. While substantial progress has been made in removing these subsidies in recent years, some direct and indirect subsidies, such as large-scale support for the mining industry, remain. Further effort is needed to reform these subsidies within the framework of ongoing market-based economic restructuring.