Biodiesel derived from oil crops is a potential renewable and carbon neutral alternative to petroleum fuels (photograph). Microalgae, like higher plants, produce storage lipids in the form of triacyglycerols (TAGs) which can be used to synthesize fatty acid methyl esters (a substitute for fossil-derived diesel fuel). Microalgae represent a very attractive alternative compared to terrestrial oleaginous species, because their productivity is much higher and it does not compete for land suitable for agricultural irrigation or consumption by humans or animals, providing therefore food security.

To date, commercial application of microalgae has concentrated on compounds that have a very high value per kilo (e.g. carotenoids). To be a feasible source for biodiesel, the current price for microalgae production needs to be reduced by two orders of magnitude. In addition, the scale of production of lipids from microalgae would need to be three orders of magnitude greater than the scale currently possible for high-value compounds. These ambitious goals are feasible because the potential productivity of microalgae is tenfold greater than that of agricultural crops.

However, the promises of several companies in the field combined with expectations from the market have led to unrealistic predictions for the potential of microalgae. There are companies that promise to produce an amount of biodiesel from microalgae that is either near or in some cases higher than the maximum amount achievable. In areas with high irradiation a theoretical maximum productivity of 280 tonnes of dry biomass per year can be produced. If we then assume a lipid content of 40% in the microalgae, the total amount of oil that can be produced is 115,000 L ha^-1 year^-1. However, these productivities are unrealistic at this point in time. With state-of-the-art technology, it might be possible to produce in the order of magnitude of 20,000 L ha^-1 year^-1 of oil – this is still significantly more than can be obtained from energy crops (the areal productivity of palm oil is 6,000 L ha^-1 year^-1).