diff --git a/packages/backend-core/tests/utilities/mocks/licenses.ts b/packages/backend-core/tests/utilities/mocks/licenses.ts
index 1fbda5655e..e374612f5f 100644
--- a/packages/backend-core/tests/utilities/mocks/licenses.ts
+++ b/packages/backend-core/tests/utilities/mocks/licenses.ts
@@ -74,6 +74,10 @@ export const useGroups = () => {
   return useFeature(Feature.USER_GROUPS)
 }
 
+export const useEnvironmentVariables = () => {
+  return useFeature(Feature.ENVIRONMENT_VARIABLES)
+}
+
 // QUOTAS
 
 export const setAutomationLogsQuota = (value: number) => {
diff --git a/packages/server/src/api/routes/tests/environmentVariables.spec.ts b/packages/server/src/api/routes/tests/environmentVariables.spec.ts
new file mode 100644
index 0000000000..86ff8367da
--- /dev/null
+++ b/packages/server/src/api/routes/tests/environmentVariables.spec.ts
@@ -0,0 +1,79 @@
+jest.mock("../../../integrations/postgres")
+import * as setup from "./utilities"
+import postgres from "../../../integrations/postgres"
+import { mocks } from "@budibase/backend-core/tests"
+import { env } from "@budibase/backend-core"
+const structures = setup.structures
+
+env._set("ENCRYPTION_KEY", "budibase")
+mocks.licenses.useEnvironmentVariables()
+
+describe("/api/env/variables", () => {
+  let request = setup.getRequest()
+  let config = setup.getConfig()
+
+  afterAll(setup.afterAll)
+
+  beforeEach(async () => {
+    await config.init()
+  })
+
+  it("should be able check the status of env var API", async () => {
+    const res = await request
+      .get(`/api/env/variables/status`)
+      .set(config.defaultHeaders())
+      .expect("Content-Type", /json/)
+      .expect(200)
+
+    expect(res.body.encryptionKeyAvailable).toEqual(true)
+  })
+
+  it("should be able to create an environment variable", async () => {
+    await request
+      .post(`/api/env/variables`)
+      .send(structures.basicEnvironmentVariable("test", "test"))
+      .set(config.defaultHeaders())
+      .expect(200)
+  })
+
+  it("should be able to fetch the 'test' variable name", async () => {
+    const res = await request
+      .get(`/api/env/variables`)
+      .set(config.defaultHeaders())
+      .expect("Content-Type", /json/)
+      .expect(200)
+    expect(res.body.variables.length).toEqual(1)
+    expect(res.body.variables[0]).toEqual("test")
+  })
+
+  it("should be able to update the environment variable 'test'", async () => {})
+
+  it("should be able to delete the environment variable 'test'", async () => {})
+
+  it("should be able to create an environment variable", async () => {})
+
+  it("should create a datasource (using the environment variable) and query", async () => {
+    const datasourceBase = structures.basicDatasource()
+    // TODO: we need to use an environment variable in the datasource configuration
+    const datasource = await request
+      .post(`/api/datasources`)
+      .send(datasourceBase)
+      .set(config.defaultHeaders())
+      .expect("Content-Type", /json/)
+      .expect(200)
+    expect(datasource._id).toBeDefined()
+
+    const query = await request
+      .post(`/api/queries`)
+      .send(structures.basicQuery(datasource._id))
+      .set(config.defaultHeaders())
+      .expect("Content-Type", /json/)
+      .expect(200)
+    expect(query._id).toBeDefined()
+  })
+
+  it("should run a query preview and check the mocked results", async () => {
+    // TODO: use the preview API
+    expect(postgres.integration).toHaveBeenCalledWith()
+  })
+})
diff --git a/packages/server/src/tests/utilities/structures.ts b/packages/server/src/tests/utilities/structures.ts
index 9d66fecc5e..4a5cd2ed20 100644
--- a/packages/server/src/tests/utilities/structures.ts
+++ b/packages/server/src/tests/utilities/structures.ts
@@ -255,3 +255,15 @@ export function basicWebhook(automationId: string) {
     },
   }
 }
+
+export function basicEnvironmentVariable(
+  name: string,
+  prod: string,
+  dev?: string
+) {
+  return {
+    name,
+    production: prod,
+    development: dev || prod,
+  }
+}