diff --git a/linit.c b/linit.c
index e9955e97..725deb35 100644
--- a/linit.c
+++ b/linit.c
@@ -13,12 +13,14 @@
 
 
 #include <stddef.h>
+#include <stdlib.h>
 
 #include "lua.h"
 
 #include "lualib.h"
 #include "lauxlib.h"
 #include "llimits.h"
+#include "lcmd.h"
 
 
 /*
@@ -40,30 +42,39 @@ static const luaL_Reg stdlibs[] = {
 };
 
 
-/*
-** Stub __command function for backtick command syntax.
-** Returns a table {code=0, stdout=cmdstring, stderr=""}.
-** The real implementation will be provided by issue #03.
-*/
-static int luaB_command (lua_State *L) {
-  const char *cmd = luaL_checkstring(L, 1);
-  lua_createtable(L, 0, 3);
-  lua_pushinteger(L, 0);
-  lua_setfield(L, -2, "code");
-  lua_pushstring(L, cmd);
-  lua_setfield(L, -2, "stdout");
-  lua_pushliteral(L, "");
-  lua_setfield(L, -2, "stderr");
+static int luaB_getenv (lua_State *L) {
+  const char *name = luaL_checkstring(L, 1);
+  const char *val = getenv(name);
+  if (val == NULL)
+    lua_pushnil(L);
+  else
+    lua_pushstring(L, val);
   return 1;
 }
 
 
+static int luaB_setenv (lua_State *L) {
+  const char *name = luaL_checkstring(L, 1);
+  if (lua_isnoneornil(L, 2))
+    unsetenv(name);
+  else {
+    const char *val = luaL_tolstring(L, 2, NULL);
+    setenv(name, val, 1);
+  }
+  return 0;
+}
+
+
 /*
 ** Register shell built-in globals (called after standard libraries).
 */
 static void opencommand (lua_State *L) {
   lua_pushcfunction(L, luaB_command);
   lua_setglobal(L, "__command");
+  lua_pushcfunction(L, luaB_getenv);
+  lua_setglobal(L, "__getenv");
+  lua_pushcfunction(L, luaB_setenv);
+  lua_setglobal(L, "__setenv");
 }
 
 
diff --git a/llex.c b/llex.c
index 37be9b96..fe1924de 100644
--- a/llex.c
+++ b/llex.c
@@ -50,7 +50,7 @@ static const char *const luaX_tokens [] = {
     "//", "..", "...", "==", ">=", "<=", "~=",
     "<<", ">>", "::", "<eof>",
     "<number>", "<integer>", "<name>", "<string>",
-    "<command>", "<command_interp>"
+    "<command>", "<command_interp>", "<envvar>"
 };
 
 
@@ -108,6 +108,9 @@ static const char *txtToken (LexState *ls, int token) {
     case TK_FLT: case TK_INT:
       save(ls, '\0');
       return luaO_pushfstring(ls->L, "'%s'", luaZ_buffer(ls->buff));
+    case TK_ENVVAR:
+      save(ls, '\0');
+      return luaO_pushfstring(ls->L, "'$%s'", luaZ_buffer(ls->buff));
     default:
       return luaX_token2str(ls, token);
   }
@@ -633,6 +636,18 @@ static int llex (LexState *ls, SemInfo *seminfo) {
       case '`': { /* explicit command `ls -l` with ${} interpolation */
         return read_command(ls, seminfo);
       }
+      case '$': {  /* environment variable $NAME */
+        next(ls);
+        if (lislalpha(ls->current)) {  /* $NAME */
+          do {
+            save_and_next(ls);
+          } while (lislalnum(ls->current));
+          seminfo->ts = luaX_newstring(ls, luaZ_buffer(ls->buff),
+                                            luaZ_bufflen(ls->buff));
+          return TK_ENVVAR;
+        }
+        else return '$';  /* bare $ as single-char token */
+      }
       case '.': {  /* '.', '..', '...', or number */
         save_and_next(ls);
         if (check_next1(ls, '.')) {
diff --git a/llex.h b/llex.h
index 111e7a57..c8a74ebb 100644
--- a/llex.h
+++ b/llex.h
@@ -41,7 +41,8 @@ enum RESERVED {
   TK_DBCOLON, TK_EOS,
   TK_FLT, TK_INT, TK_NAME, TK_STRING,
   TK_COMMAND,
-  TK_COMMAND_INTERP
+  TK_COMMAND_INTERP,
+  TK_ENVVAR
 };
 
 /* number of reserved words */
diff --git a/lparser.c b/lparser.c
index 53c74fcd..ae88577a 100644
--- a/lparser.c
+++ b/lparser.c
@@ -1302,8 +1302,25 @@ static void commandexp (LexState *ls, expdesc *v) {
 }
 
 
+static void codeenvget (LexState *ls, expdesc *v, TString *name) {
+  FuncState *fs = ls->fs;
+  int base, line;
+  expdesc func, arg;
+  TString *fname = luaX_newstring(ls, "__getenv", 8);
+  line = ls->linenumber;
+  buildglobal(ls, fname, &func);
+  luaK_exp2nextreg(fs, &func);
+  base = func.u.info;
+  codestring(&arg, name);
+  luaK_exp2nextreg(fs, &arg);
+  init_exp(v, VCALL, luaK_codeABC(fs, OP_CALL, base, 2, 2));
+  luaK_fixline(fs, line);
+  fs->freereg = cast_byte(base + 1);
+}
+
+
 static void primaryexp (LexState *ls, expdesc *v) {
-  /* primaryexp -> NAME | '(' expr ')' | COMMAND */
+  /* primaryexp -> NAME | '(' expr ')' | COMMAND | ENVVAR */
   switch (ls->t.token) {
     case '(': {
       int line = ls->linenumber;
@@ -1321,6 +1338,11 @@ static void primaryexp (LexState *ls, expdesc *v) {
       commandexp(ls, v);
       return;
     }
+    case TK_ENVVAR: {
+      codeenvget(ls, v, ls->t.seminfo.ts);
+      luaX_next(ls);
+      return;
+    }
     default: {
       luaX_syntaxerror(ls, "unexpected symbol");
     }
@@ -2160,6 +2182,30 @@ static void retstat (LexState *ls) {
 }
 
 
+static void envstat (LexState *ls) {
+  /* envstat -> '$' NAME '=' expr */
+  FuncState *fs = ls->fs;
+  TString *name = ls->t.seminfo.ts;
+  int base, line;
+  expdesc func, arg, val;
+  TString *fname;
+  line = ls->linenumber;
+  luaX_next(ls);  /* skip TK_ENVVAR */
+  checknext(ls, '=');
+  fname = luaX_newstring(ls, "__setenv", 8);
+  buildglobal(ls, fname, &func);
+  luaK_exp2nextreg(fs, &func);
+  base = func.u.info;
+  codestring(&arg, name);
+  luaK_exp2nextreg(fs, &arg);
+  expr(ls, &val);
+  luaK_exp2nextreg(fs, &val);
+  init_exp(&val, VCALL, luaK_codeABC(fs, OP_CALL, base, 3, 1));
+  luaK_fixline(fs, line);
+  fs->freereg = cast_byte(base);
+}
+
+
 static void statement (LexState *ls) {
   int line = ls->linenumber;  /* may be needed for error messages */
   enterlevel(ls);
@@ -2225,6 +2271,10 @@ static void statement (LexState *ls) {
       gotostat(ls, line);
       break;
     }
+    case TK_ENVVAR: {  /* stat -> '$' NAME '=' expr */
+      envstat(ls);
+      break;
+    }
 #if defined(LUA_COMPAT_GLOBAL)
     case TK_NAME: {
       /* compatibility code to parse global keyword when "global"