Natural gas plays a key role in China’s clean energy future.The engineered fluids containing chemical additives and proppant are pumped under high pressure into the well to create and hold open fractures in the shale formation during hydraulic fracturing for the shale gas extraction.The extraction process of shale gas resource involves a variety of activities that can potentially impact environmental quality.Many concerns from the public often associate the impacts on the environment as negative.However,not all are,and this should not mean that energy use has an overall detrimental impact on society.The future of sustainable energy consumption and the health of the environment are most closely intertwined than ever before.Policymakers faced with energy supply and environmental costs must leverage the positive and negative aspects caused by the development of shale gas,which is really a new energy resource in China.All energy resources have associated impacts,either direct or indirect,on the environment.Concerns regarding environment costs are exist for every energy sources including shale gas development.The aspects of environment costs due to the development of shale gas consist of ground water protection,fracturing fluid chemistry,water sourcing and water disposal etc.All of these aspects should be reviewed and quantified for the assessment of the environmental costs of shale gas development.Furthermore,these environmental considerations for shale gas should not be reviewed in isolation.The interactions of these aspects of environment costs should also be considered the proper development of shale gas.Pre-fracturing evaluations,hydraulic fracturing operations,monitoring approaches,fluid chemistry and water disposal should be considered consequently in order to evaluate the environmental impaction of shale gas development properly.Energy decisions to be made will require trade-offs and the typical analyses tend to focus on only one environmental aspect or never consider practical limitations.The method of environmental cost of energy (ECOE) is proposed in this paper and the aspects of environmental costs are quantified for the sound decisions about the energy future of shale gas development.