In this study, an attempt was made to use micro-algal system for the production of biodiesel precursors and simultaneous CO2 mitigation. Chlorella sp. was found to have a higher growth rate as compared to the other algal species tested namely Chlamydomonas sp. and Synnecococcus sp. At different CO2 concentrations (0.03%, 3%, 10% and 15%), the lipid productivity was 23.0, 20.0 and 27.3 mg/L/d respectively. Calcite produced was characterized using FT-IR, SEM and XRD. The FAME in crude biofuel was analyzed by GC-FID that found to contain palmitic acid (C16:0), docosapentaenoic acid (C22:5) and docosahexaenoic acid (C22:6). The calorific value of Chlorella sp. was found to be 29 kJ/g which is higher than values reported for fresh water microalgae making it a potential candidate to be used as an alternate fuel. (C) 2010 Elsevier Ltd. All rights reserved.