Bash – Environment variable set but not respected

export $key=$val should work just fine in bash. I suspect your issue is the pipe (|). All commands in a pipeline are executed in a subshell. In your example, the instance of bash that is running your script will fork off 2 subshells: one for cat $1 and another for the while read .... The variables are assigned and exported in the subshell running the while loop, and then all of them are promptly thrown out when the subshell exits. One way to fix this is to not spawn subshells at all. Instead of a useless use of cat, try redirection instead:

while read ...; do
   ...
done < "$1"

BashFAQ 24 explains this in much greater detail.

An alternate approach is to just source the file, with exports thrown in:

. <(sed '/^export/!s/^/export /' "$1")

^{The <( ) is process substitution.}

As an additional note of caution, since you are reading environment variables from an argument, you must make sure that the argument file $1 is a trusted source so it can't do bad things to your script.

One way:

FOO=bar sh -c 'first && second'

This sets the FOO environment variable for the single sh command.

To set multiple environment variables:

FOO=bar BAZ=quux sh -c 'first && second'

Another way to do this is to create the variable and export it inside a subshell. Doing the export inside the subshell ensures that the outer shell does not get the variable in its environment:

( export FOO=bar; first && second )

Summarizing the (now deleted) comments: The export is needed to create an environment variable (as opposed to a shell variable). The thing with environment variables is that they get inherited by child processes. If first and second are external utilities (or scripts) that look at their environment, they would not see the FOO variable without the export.