No, it makes lots of sense, and it wasn't thought up by greenies. I just am against trading them across national boundaries. It makes much more sense as a method of controlling pollution than command and control regulations. The main reason the Clean Air Act of 1990 has been more successful than its predecessors was that it allowed trading of pollution rights instead of using government regulations that micromanage industrial processes. The idea is that the government should not care how pollution is reduced, just the amount by which it is reduced. After initial allocation of pollution quotas companies were allowed to sell off the quotas the did not use. If a company figured out a cheaper or more efficient method of reducing pollution than the old command and control style regulations, it could then sell the the excess quotas to other companies with higher abatement costs.
An even better way to decrease pollution would be to tax it. That way there are economic incentives to develop new technologies and stragegies for decreasing pollution. Also, the revenues generated could be used to decrease income tax rates.
The big problem with the pollution trading system proposed by Kyoto was that it deliberately stacked the deck against the US. The US had already greatly improved its industrial emissions and could only meet its targets by either restricting industrial output, buying credits from other countries, or using much higher cost abatement technologies. Much of Europe was not as far along on cleaning up their industries and could meet its targets much more cheaply. Also with the fall of communism in Eastern Europe, the high level of pollution there was included in the base levels from which cuts would be made. Russia is in a good position, because their base level was determined prior to the fall of communism. The collapse of the Russian economy after 1991 decreased industrial output and its associated pollution, so they have considerable creditst to sell.
The Kyoto treaty specifically ignores the effects of reforestation on removing carbon dioxide from the air over North America. We have more forest today than 1492 when Christopher Columbus discovered the New World. In fact, according to Peter Huber's book Hard Green, the growth of forests in the US may actually be removing more carbon dioxide than all the economic activity in the US is putting in to the atmosphere. If growth of forests were considered, the Euorpeans would have to be paying us for pollution credits!
For that matter, I'm not even sure that a "flat tax" on pollution would necessarily be UnConstitutional (always a nice consideration). Structure it as a simple per-unit Excise Tax, and there is (arguably) a Constitutional basis for the idea (as opposed to Bureaucratic Regulatory oversight, a very anti-Constitutional "command-and-control" methodology).