The search for a clean, non-polluting fuel has pointed scientists to a solution that could ease a multitude of urban and rural problems. In fact, it sounds too good to be true.

The use of biomass, which includes everything from municipal solid waste to trees and grasses, as a basis for a gasoline substitute could put farmers back to work, ease the greenhouse effect, reduce most of the urban pollution caused by auto emissions and balance the trade deficit.the United States paid out $44 billion for petroleum imports in 1987, contributing to the entire balance-of-payment deficit that year of $154 billion, according to U.S. Department of Energy statistics, .

This country's reliance on fossil fuels to heat homes and power cars has created a one-way stream of chemicals that pollute the air with noxious substances. As the chemicals filter up into the atmosphere, they help form an insulating shroud that many scientists agree will cause a "greenhouse effect."

The researchers at the National Renewable Energy Laboratory in Golden, Colo., (formerly the Solar Energy Research Institute) are examining an alternative fuel they think will close the loop, said Norm Hinman, director of NREL's biofuels program. If the loop is closed, most vehicle emissions would be absorbed back into the biosphere.

Their plan takes advantage of natural processes. During photosynthesis, green plants use carbon dioxide, a major greenhouse gas, to make their food.

Mr. Hinman estimated there will be 150 acres of unused American farmland by 2010, mostly due to increasingly efficient farming methods that have increased crop yields.

The literal greening of America could accomplish all the positive results listed, Mr. Hinman said.

"Certainly we're going to have to grow a lot more biomass, and there would be very large areas of the United States that would be required to grow the biomass necessary," said Duane Sunderman, NREL's director. He added that 100 million acres or more would be required for growing the raw material required to make ethanol, an alcohol fuel.

The first attempts to convert Americans to this new fuel are already evident during winters on Colorado's Front Range when the "Mtbe" stickers appear on the gas pumps. Mtbe is an "ether" made from plant material converted to methanol, which is used as an additive in normal gasoline.

Gas with Mtbe, called "reformulated fuel," lowers the carbon monoxide content of auto emissions. The Clean Air Act requires major carbon monoxide reductions in 1992.

Questions about the quality of blended fuels, and what they do to cars built to run on gasoline haunted alternative fuel producers in the late '70s.

"There were (distributors) called 'splash blenders,' who were very sloppy. And some of it was just perception," Mr. Hinman said. "Blending is now very well controlled. Major automotive manufacturers, foreign and domestic, fully warrant their automobiles on gasohol and Mtbe."

However, Mtbe is only the first step in a steady movement toward pure biofuels. Eventually, with some technical adjustments, cars will run solely on ethanol, which is fermented from plant material.

(Gasohol, used mainly in the Midwest, is made from about 10 percent ethanol and 90 percent gasoline.)

Unlike fossil fuel - organic matter compressed over many millennia in the Earth's crust - biofuel is made from new plant matter, from trees and grasses.

New plant matter is free of the sulfur produced in fossil fuel by bacterial action. Mr. Hinman, who calls biomass "young clean coal," noted that sulfur is a basic pollutant, which forms into acid rain in the atmosphere.

Burning pure biofuels does, however, create emissions. Carbon dioxide and aldehydes, which include such things as the preservative formaldehyde, will spew out of the exhaust pipes of ethanol- and methanol-powered cars.

Most of the aldehydes would be trapped by catalytic converters similar to the ones that are already required on automobiles, Mr. Hinman said. The carbon dioxide would be reabsorbed by the green plants being grown for fuel.

Carbon dioxide is used by plants during photosynthesis, a process requiring chlorophyll, which makes plant nutrients (mostly sugars) out of carbon dioxide and water.

Mr. Hinman said the carbon dioxide emitted from vehicles will be reabsorbed, in large part, by the plants being grown for fuel.