Carbon capture and sequestration technologies are used to reduce carbon emissions. Membranes, solvents, and adsorbents are the three major methods of CO capture. One of the promising methods is the use of algae to absorb CO from flue gases and convert it into biomass. Algae have great potential as renewable fuel sources and CO capture using photosynthesis for carbon fixation has also attracted much attention. This paper presents an extensive and in-depth report on the utilization of algae for carbon capture and accumulation. This is done in conjunction with cultivating the algae for the production of biomass for biodiesel production. Different systems are investigated for algae cultivation as well as carbon capture to effectively mitigate carbon emissions. The performance and productivity of these biosystems depend on various conditions including algae type, light sources, nutrients, pH, temperature, and mass transfer. Macroalgae and microalgae species were explored to determine their suitability for carbon capture and sequestration, along with the production of biodiesel. The steps for producing biodiesel were comprehensively reviewed, which are harvesting, dehydrating, oil extraction, oil refining, and transesterification. This technology combines active carbon capture with the potential of biodiesel production.