To specify environment variables in a Docker Compose file, we use a key called environment in the relevant service. environment is an array, and to specify an environment variable, the format is simply VARIABLE=VALUE.

version: '3'
services:
  backend:
    environment:
      - VARIABLE=VALUE

We can also specify just VARIABLE, which will go through our shell for an environment variable that matches the name specified. It’s best to be explicit by going with the VARIABLE=VALUE approach as our shell may not have the specified environment variable.