How to properly use ENV variables in Nginx config?

I want to pass the RAILS_ENV env variable to nginx and use it to set the value for the rails_env directive.

I can read the value of the variable from the environment with LUA module:

location @app {
    set_by_lua $env_rails_env 'return os.getenv("RAILS_ENV")';
    return 200 'rails env is: ${env_rails_env}';
}

When I curl it, I get the correct answer:

[jsosic@workstation ~]$ curl http://localhost:3005/
rails env is: development

But, if I want to use it as a value for nginx directive:

location @app {
    set_by_lua $env_rails_env 'return os.getenv("RAILS_ENV")';
    rails_env         $env_rails_env;
    limit_req         zone=one burst=100;
    passenger_enabled on;
}

I get the following log:

Message from application: '${env_rails_env}' database is not configured.
Available: ["default", "development", "test", "production"] 

Is this even possible?