After Hal Jordan has rescued Carol Ferris from the crashed helicopter at the party, he flies by to make sure she's ok. She can tell it's Hal under the flimsy mask as nothing else about him has changed, except a shiny green superhero costume, so at least that's 1 extra point on the believeability scale.
Hector, in a comedy moment, is becoming a monster. The top scientists around finally figure out that something is wrong with him, and he is brought back to the lab. With his telekinetic powers he manages to break out of his restraints and is about to kill the doctor and his father the Senator ... until Hal shows up. They fight, but Hector still manages to throw his dad into a large oven and burn him alive. Hector touches Hal to gain his memories - and this surge of power makes its way to Parallax floating around in space, who heads straight to earth.
Meanwhile, on the planet OA, the red guardian Sinestro finds out some backstroy from the Guardians. We now see there is one missing pole. Many years ago, one of them thought he could harness the "yellow" energy of fear, but was consumed by it and turned into Parallax. He was beaten by Abin Sur, and now wants revenge.
Sinestro convinces them to pool their efforts and get to work on a new yellow ring ('one right to bind them' etc etc etc. Kind of seen this one before.) They think about it a little more, and then the ring is made.
Sinestro is about to use it when Hal shows up unannounced. He reasons that he is young, and not very smart, but he has just learnt today that fear can hold your prisoner but hope can set you free (he must have been speaking to the Senator about Shawshank Redemption). Even though these so called Guardians are the wisest beings around and made everything, Hal tells them off, says they are all wrong, and they shouldn't use the ring. The Guardians hang their heads in shame.
He goes off to fight Parallax alone.
Hector has Carol trapped in a trance, floating in the air with a needle to her neck. Hal reasons with him, and even gives him the ring, but it's not working and they both fight. Parallax shows up at their abandoned factory, and just like that Hector is "consumed" or whatever the word is, and dead. He's not going to be in the sequel.
Parallax continues to causes carnage outside, vaporising good citizens.
Hal leads him out of earth's atmosphere and towards the sun. He about-turns, imagines some fighter jets pulling him away from the sun's gravity, and suddenly Parallax is trapped.
Parallax is being pulled towards the sun. Hal sucker-punches him, and the evil genius dies.
Hal for some reason now decides to fall asleep (?!) ... but is rescued by Sinestro before he too falls into the sun. Those green suits have quite the flame-retardant material.
Back on OA, Hal is congratulated by the 3599 other Lanterns. They have a little firework party with their green rings.
Hal returns to earth to see Carol. They kiss before he flies off to look for trouble.
But wait, there's more after the credits ... Sinestro, who we all knew was really a bad guy, finds the yellow ring and tries it on. His suit turns a snazzy shade of yellow, his eyes turn yellow, and he gives a little evil grin.