EUAs are a natural hedge against equities
The particular situation that the European carbon market is in makes EUAs a natural hedge against equities.
While credit restrictions could reduce consumption and therefore emissions, a greater factor in EUA demand is the reduced availability of finance for emission reduction projects, both within and outside of Europe.
Most analysts seem to be saying that the CDM pipeline is facing restrictions as projects find it difficult to find funding – and even that Phase 2 compliance buyers will not be able to fill their quota of CERs (collectively, EU ETS participants can use UN-regulated offsets, called CERs, to cover up to 13.4% of their emissions). This will make higher internal reductions necessary, exerting upward pressure on EUAs.
Within Europe, a higher cost of capital makes clean technology more expensive, so a higher carbon price will be necessary to make the business case for the same capital investment.
While tighter credit tends to send stock downwards, it will tend to send EUAs up.