Rapid urbanization and rise in population lead to increased energy demand. It has been predicted to increase at least 50% by 2030. The natural petroleum is unable to meet the current consumption rate, as the rate of consumption is faster than the formation. Moreover, fossil fuel is a non-renewable energy resource which is destroyingour environment through greenhouse gas emissions and consequent global warming. Therefore, in order to end the use of hazardous non-renewable resources, the hunt for clean and sustainable energy resources has become the most challenging topic. Currently, several renewable resources are being explored and implemented. Biofuels, derived from living organisms, came to limelight as they are sustainable and eco-friendly. Unfortunately, the present biofuel projections are based on feed-stocks that are also food commodities and resources suitable for conventional agriculture. One possibility to overcome the problem is the cultivation of microalgae and switching to third generation biofuels, which seem to be a promising source since algae are able to efficiently convert sunlight, water, and CO2 into a variety of products suitable for renewable energy applications. The carbohydrates present in microalgae are considered an appropriate feedstock for microbial growth and for the production of various fermentation products. The high lipid content in algal biomass makes it promising for biodiesel production, while the related long-chain fatty acids, pigments and proteins have their own nutraceuticals and pharmaceutical applications. Therefore, microalgal biorefinery processes deserve further investigations and if the biorefinery can be coupled with enhanced CO2 sequestration then it can be a win win situation for everybody.