diff --git a/instack/runner.py b/instack/runner.py
index 75555d7..6c6122e 100644
--- a/instack/runner.py
+++ b/instack/runner.py
@@ -132,7 +132,8 @@ class ElementRunner(object):
         all_elements = element_dependencies.expand_dependencies(
             self.elements, ':'.join(self.element_paths))
         self.elements = all_elements
-        os.environ['IMAGE_ELEMENT'] = ' '.join([x for x in self.elements])
+        os.environ['IMAGE_ELEMENT'] = ' '.join(
+            [x for x in sorted(self.elements)])
         LOG.info("List of all elements and dependencies: %s" %
                  ' '.join(list(self.elements)))
 
@@ -142,6 +143,11 @@ class ElementRunner(object):
             if elem in self.elements:
                 LOG.info("Excluding element %s" % elem)
                 self.elements.remove(elem)
+        # Need to redefine OS.environ['IMAGE_ELEMENT'] after removing excludes
+        os.environ['IMAGE_ELEMENT'] = ' '.join(
+            [x for x in sorted(self.elements)])
+        LOG.info("List of all elements and dependencies after excludes: %s" %
+                 ' '.join(list(self.elements)))
 
     def run_hook(self, hook):
         """Run a hook on the current system.
diff --git a/instack/tests/test_runner.py b/instack/tests/test_runner.py
index dcf71e4..e87d9d3 100644
--- a/instack/tests/test_runner.py
+++ b/instack/tests/test_runner.py
@@ -74,10 +74,14 @@ class TestRunner(testtools.TestCase):
 
         self.runner.copy_elements()
         self.runner.load_dependencies()
+        self.assertEqual(os.environ['IMAGE_ELEMENT'],
+                         'dep1 dep2 echo os')
         self.runner.process_exclude_elements()
 
         self.assertEqual(len(self.runner.elements), 3)
         self.assertFalse('dep1' in self.runner.elements)
+        self.assertEqual(os.environ['IMAGE_ELEMENT'],
+                         'dep2 echo os')
 
     def test_process_path(self):
         cwd = os.path.dirname(__file__)