diff --git a/features/steps/test_starter/{{ cookiecutter.repo_name }}/src/{{ cookiecutter.python_package }}/settings.py b/features/steps/test_starter/{{ cookiecutter.repo_name }}/src/{{ cookiecutter.python_package }}/settings.py
index 3207b1da0a..5967eda35e 100644
--- a/features/steps/test_starter/{{ cookiecutter.repo_name }}/src/{{ cookiecutter.python_package }}/settings.py	
+++ b/features/steps/test_starter/{{ cookiecutter.repo_name }}/src/{{ cookiecutter.python_package }}/settings.py	
@@ -25,14 +25,14 @@
 # from kedro.config import OmegaConfigLoader
 # CONFIG_LOADER_CLASS = OmegaConfigLoader
 # Keyword arguments to pass to the `CONFIG_LOADER_CLASS` constructor.
-# CONFIG_LOADER_ARGS = {
-#       "base_env": "base",
-#       "default_run_env": "local",
+CONFIG_LOADER_ARGS = {
+      "base_env": "base",
+      "default_run_env": "local",
 #       "config_patterns": {
 #           "spark" : ["spark*/"],
 #           "parameters": ["parameters*", "parameters*/**", "**/parameters*"],
 #       }
-# }
+}
 
 # Class that manages Kedro's library components.
 # from kedro.framework.context import KedroContext
diff --git a/kedro/templates/project/{{ cookiecutter.repo_name }}/src/{{ cookiecutter.python_package }}/settings.py b/kedro/templates/project/{{ cookiecutter.repo_name }}/src/{{ cookiecutter.python_package }}/settings.py
index db58cab52d..59a60aa905 100644
--- a/kedro/templates/project/{{ cookiecutter.repo_name }}/src/{{ cookiecutter.python_package }}/settings.py	
+++ b/kedro/templates/project/{{ cookiecutter.repo_name }}/src/{{ cookiecutter.python_package }}/settings.py	
@@ -28,14 +28,14 @@
 # CONFIG_LOADER_CLASS = OmegaConfigLoader
 
 # Keyword arguments to pass to the `CONFIG_LOADER_CLASS` constructor.
-# CONFIG_LOADER_ARGS = {
-#       "base_env": "base",
-#       "default_run_env": "local",
+CONFIG_LOADER_ARGS = {
+      "base_env": "base",
+      "default_run_env": "local",
 #       "config_patterns": {
 #           "spark" : ["spark*/"],
 #           "parameters": ["parameters*", "parameters*/**", "**/parameters*"],
 #       }
-# }
+}
 
 # Class that manages Kedro's library components.
 # from kedro.framework.context import KedroContext
diff --git a/tests/framework/session/test_session.py b/tests/framework/session/test_session.py
index 9e4e9364a5..532d42259d 100644
--- a/tests/framework/session/test_session.py
+++ b/tests/framework/session/test_session.py
@@ -165,6 +165,17 @@ class MockSettings(_ProjectSettings):
     return _mock_imported_settings_paths(mocker, MockSettings())
 
 
+@pytest.fixture
+def mock_settings_config_loader_args_env(mocker):
+    class MockSettings(_ProjectSettings):
+        _CONFIG_LOADER_ARGS = Validator(
+            "CONFIG_LOADER_ARGS",
+            default={"base_env": "something_new"},
+        )
+
+    return _mock_imported_settings_paths(mocker, MockSettings())
+
+
 @pytest.fixture
 def mock_settings_file_bad_config_loader_class(tmpdir):
     mock_settings_file = tmpdir.join("mock_settings_file.py")
@@ -423,6 +434,28 @@ def test_load_config_loader_args(self, fake_project, mock_package_name, mocker):
         )
         assert result["spark"] == ["spark/*"]
 
+    @pytest.mark.usefixtures("mock_settings_config_loader_args")
+    def test_config_loader_args_no_env_overwrites_env(
+        self, fake_project, mock_package_name, mocker
+    ):
+        session = KedroSession.create(mock_package_name, fake_project)
+        result = session._get_config_loader()
+
+        assert isinstance(result, OmegaConfigLoader)
+        assert result.base_env == ""
+        assert result.default_run_env == ""
+
+    @pytest.mark.usefixtures("mock_settings_config_loader_args_env")
+    def test_config_loader_args_overwrite_env(
+        self, fake_project, mock_package_name, mocker
+    ):
+        session = KedroSession.create(mock_package_name, fake_project)
+        result = session._get_config_loader()
+
+        assert isinstance(result, OmegaConfigLoader)
+        assert result.base_env == "something_new"
+        assert result.default_run_env == ""
+
     def test_broken_config_loader(self, mock_settings_file_bad_config_loader_class):
         pattern = (
             "Invalid value 'tests.framework.session.test_session.BadConfigLoader' received "