Docker compose with Postresql runs into a zero-length delimited identifier

I'm trying to run postresql with docker compose

version: "3.8"

services:
  db:
    image: postgres:14.1-alpine
    restart: always
    environment:
      - POSTGRES_USER=test
      - POSTGRES_PASSWORD=test
      - POSTGRES_DB=test
    ports:
      - "5432:5432"
    volumes:
      - db:/var/lib/postgresql/data
volumes:
  db:
    driver: local

When I then try to start it with docker compose up I get the following error:

db-1        | performing post-bootstrap initialization ... 2022-09-19 12:45:21.913 UTC [30] FATAL:  zero-length delimited identifier at or near """" at character 12
db-1        | 2022-09-19 12:45:21.913 UTC [30] STATEMENT:  ALTER USER ""test"" WITH PASSWORD E'"test"';
db-1        |   
db-1        | child process exited with exit code 1

I have experimented with single quotes, double quotes, no quotes for the environment variables, but the issue persists. My understanding is that nothing that isn't in the docker-compose.yml can be affecting the database. There is no postgres running locally when I try to start this. What is causing the issue?

Edit: Docker compose version is

➜  ~ docker compose version
Docker Compose version v2.10.2

Edit: Added the output of a non-printable character checker