"Carbon neutral" is of course for most businesses a complete fiction for the near future, but then I don't see anyone trying to force them to be. Cap and trade is a much better system, thanks to the "trade" part, than just the "cap" without the trade, because thanks to the free market, the idea is that companies who can reduce emissions in the cheapest way will do so and sell their permits to those who would face much higher costs to reduce their own permits. Then gradually decrease the amount of permits available, so that emissions are reduced further, but still the free market and the tradability of the permits ensures that the emissions are reduced there where the marginal costs of doing so are the lowest.

Whether those permits are handed out to companies ("grandfathered" or sold by auction doesn't actually make much of a difference, except for starting companies that are disadvantaged in the case of handouts, which after all have to be based on some kind of estimation of size / current emissions.

Unless you have any indications that any company is being, or in the near future will be, forced to be carbon neutral, this is just a pointless strawman. And see above about the trading enhancing efficiency by letting the companies that can reduce their emissions the cheapest, do most of the reducing.

Cap and trade is specifically designed to increase their cost by far less than any other system that causes the same reduction in emissions would. Therefore I'd say you're misdirecting your argument at "cap and trade" when you should be complaining about the too small number of permits, or, equivalently, too ambitious emission reduction targets.

That's of course the core argument, yeah... which Dannymac did indeed gloss over in his post.