diff --git a/diskimage_builder/elements.py b/diskimage_builder/elements.py
index 3002a919..728ccf98 100644
--- a/diskimage_builder/elements.py
+++ b/diskimage_builder/elements.py
@@ -20,9 +20,8 @@ import sys
 
 
 def get_elements_dir():
-    if 'ELEMENTS_DIR' not in os.environ:
-        return os.path.abspath(
-            os.path.join(os.path.dirname(__file__), '..', 'elements'))
+    if not os.environ.get('ELEMENTS_DIR'):
+        raise Exception("$ELEMENTS_DIR must be set.")
     return os.environ['ELEMENTS_DIR']
 
 
diff --git a/diskimage_builder/test_elementdeps.py b/diskimage_builder/test_elementdeps.py
index a62a66f3..c52cafa2 100644
--- a/diskimage_builder/test_elementdeps.py
+++ b/diskimage_builder/test_elementdeps.py
@@ -16,9 +16,10 @@
 import os
 
 from testtools import TestCase
-from fixtures import Fixture, TempDir
+from fixtures import Fixture, EnvironmentVariable, TempDir
 
 from diskimage_builder.elements import expand_dependencies
+from diskimage_builder.elements import get_elements_dir
 
 data_dir = os.path.abspath(
     os.path.join(os.path.dirname(__file__), 'test-elements'))
@@ -72,3 +73,13 @@ class TestElementDeps(TestCase):
         result = expand_dependencies(['circular1'],
                                      elements_dir=self.element_dir)
         self.assertEquals(set(['circular1', 'circular2']), result)
+
+
+class TestElements(TestCase):
+    def test_depends_on_env(self):
+        self.useFixture(EnvironmentVariable('ELEMENTS_DIR', '/foo/bar'))
+        self.assertEquals('/foo/bar', get_elements_dir())
+
+    def test_env_not_set(self):
+        self.useFixture(EnvironmentVariable('ELEMENTS_DIR', ''))
+        self.assertRaises(Exception, get_elements_dir, ())
diff --git a/diskimage_builder/test_elements.py b/diskimage_builder/test_elements.py
index 1668b8a9..503277e8 100644
--- a/diskimage_builder/test_elements.py
+++ b/diskimage_builder/test_elements.py
@@ -22,6 +22,7 @@ class StubPackage:
     pass
 
 
+# load all tests from /elements/*/tests/ dirs.
 # conceptually load_tests should be in __init__, but see
 # http://bugs.python.org/issue16662 instead. So, its here in test_elements.py
 def load_tests(loader, tests, pattern):