The increasing global demand of biofuels for energy security and reduction in climate change effects generate the opportunity to explore new biomass sources. Algae is a very promising source of biomass in this context as it sequester a significant quantity of carbon from atmosphere and industrial gases and is also very efficient in utilizing the nutrients from industrial effluents and municipal wastewater. Therefore cultivation of algal biomass provide dual benefit, it provides biomass for the production of biofuels and also save our environment from air and water pollution. The life cycle assessment (LCA) of algal biofuels suggests them to be environmentally better than the fossil fuels but economically it is not yet so attractive.