diff --git a/kani-compiler/src/kani_compiler.rs b/kani-compiler/src/kani_compiler.rs
index cdb17b8cd0ac..2a5e4c188578 100644
--- a/kani-compiler/src/kani_compiler.rs
+++ b/kani-compiler/src/kani_compiler.rs
@@ -33,6 +33,7 @@ use rustc_hir::definitions::DefPathHash;
 use rustc_interface::Config;
 use rustc_middle::ty::TyCtxt;
 use rustc_session::config::{ErrorOutputType, OutputType};
+use rustc_session::EarlyErrorHandler;
 use rustc_span::ErrorGuaranteed;
 use std::collections::{BTreeMap, HashMap};
 use std::fs::File;
@@ -370,6 +371,7 @@ impl Callbacks for KaniCompiler {
     /// During the initialization state, we collect the crate harnesses and prepare for codegen.
     fn after_analysis<'tcx>(
         &mut self,
+        _handler: &EarlyErrorHandler,
         _compiler: &rustc_interface::interface::Compiler,
         rustc_queries: &'tcx rustc_interface::Queries<'tcx>,
     ) -> Compilation {
diff --git a/kani-compiler/src/session.rs b/kani-compiler/src/session.rs
index 6061554200dc..c19501c4a62e 100644
--- a/kani-compiler/src/session.rs
+++ b/kani-compiler/src/session.rs
@@ -9,6 +9,8 @@ use rustc_errors::{
     emitter::Emitter, emitter::HumanReadableErrorType, fallback_fluent_bundle, json::JsonEmitter,
     ColorConfig, Diagnostic, TerminalUrl,
 };
+use rustc_session::config::ErrorOutputType;
+use rustc_session::EarlyErrorHandler;
 use std::io::IsTerminal;
 use std::panic;
 use std::str::FromStr;
@@ -71,7 +73,8 @@ pub fn init_session(args: &ArgMatches, json_hook: bool) {
     // Initialize the rustc logger using value from RUSTC_LOG. We keep the log control separate
     // because we cannot control the RUSTC log format unless if we match the exact tracing
     // version used by RUSTC.
-    rustc_driver::init_rustc_env_logger();
+    let handler = EarlyErrorHandler::new(ErrorOutputType::default());
+    rustc_driver::init_rustc_env_logger(&handler);
 
     // Install Kani panic hook.
     if json_hook {
diff --git a/rust-toolchain.toml b/rust-toolchain.toml
index 98b700fbda14..f672b2397f5a 100644
--- a/rust-toolchain.toml
+++ b/rust-toolchain.toml
@@ -2,5 +2,5 @@
 # SPDX-License-Identifier: Apache-2.0 OR MIT
 
 [toolchain]
-channel = "nightly-2023-06-25"
+channel = "nightly-2023-07-01"
 components = ["llvm-tools-preview", "rustc-dev", "rust-src", "rustfmt"]