As I see, the use of this envvar is for private purpose: to pass nvim address to python script.
So well-known envvar names should not be used to avoid collision.
Actually, this causes a problem when flatten.nvim is used: in a :terminal, setting this envvar causes child nvim process to exit immediately, before flatten.nvim mechanism takes effect.
The child nvim tries to bind to the address, which is already taken by the parent nvim!
I renamed this envvar (all relevant references to this name) in this package, and it still works correctly.