msg: No handler was ready to authenticate. 1 handlers were checked. ['HmacAuthV4Handler'] Check your credentials

For those hitting this problem, you can solve it by making setting the become/sudo: False and connection: local in the playbook.

---
- hosts: localhost
  connection: local
  become: False
  tasks:
   ...
   ...

Hope this will help others.

I fixed the problem, I guess I didn't really have a solid understanding of what environmental variables are. I fixed it by just setting my aws_access_key and aws_secret_key inside of my ec2 task, below is my working playbook

- hosts: localhost  
  connection: local  
  gather_facts: False  

  tasks:  
    #this task creates 5 ec2 instances that are all named demo and are copies of the image specified  
    - name: Provision a set of instances  
      ec2:  
         aws_access_key: .....  
         aws_secret_key: ....  
         key_name: .....  
         group: .....  
         instance_type: t2.micro  
         image: ......  
         region: us-east-1  
         ec2_url: .......  
         wait: true  
         exact_count: 5  
         count_tag:  
            Name: Demo  
         instance_tags:  
            Name: Demo  
      register: ec2  

I guess now I need to start using ansible vault to just hold my key and ID.

In my case the variables must have been in quotes (single or double it does not matter).

BAD:

export AWS_ACCESS_KEY_ID=AK123
export AWS_SECRET_ACCESS_KEY=abc123

GOOD:

export AWS_ACCESS_KEY_ID='AK123'
export AWS_SECRET_ACCESS_KEY='abc123'

GOOD:

export AWS_ACCESS_KEY_ID="AK123"
export AWS_SECRET_ACCESS_KEY="abc123"