A chemolithotrophic bacterium, Serratia sp. ISTD04, enriched in the chemostat in presence of sodium bicarbonate as sole carbon source was evaluated for potential of carbon dioxide (CO2) sequestration and biofuel production. CO2 sequestration efficiency of the bacterium was determined by enzymatic activity of carbonic anhydrase and ribulose-1,5-bisphosphate carboxylase/oxygenase (RuBisCO). Further, Western blot analysis confirmed presence of RuBisCO. The bacterium produced 0.487 and 0.647 mg mg (1) per unit cell dry weight of hydrocarbons and lipids respectively. The hydrocarbons were within the range of C-13-C-24 making it equivalent to light oil. GC-MS analysis of lipids produced by the bacterium indicated presence of C-15-C-20 organic compounds that made it potential source of biodiesel after transesterification. GC-MS, FTIR and NMR spectroscopic characterization of the fatty acid methyl esters revealed the presence of 55% and 45% of unsaturated and saturated organic compounds respectively, thus making it a balanced biodiesel composition. (C) 2013 Elsevier Ltd. All rights reserved.