Algae are a diverse group of photosynthetic organisms at the base of the aquatic food chain, important in marine, freshwater, and some terrestrial ecosystems. Algae range from microscopically small (photosynthetic bacteria, chlorophytes, diatoms, etc.) to the size of large trees (kelp). They are the dominant source of food for marine life and are also consumed by humans, in the form of nori and kelp and as the source of emulsifiers in processed food and other products (like toothpaste).

Algae are capable of the highest per-acre production of useful fuels of any biomass technology, out-stripping traditional crops by factors of ten to a thousand fold. Most critically, algal bioenergy can be grown in a way that does not compete with food crops for land. Thus algae can be grown in a way that has little or no effect on food prices and availability. Additionally, they build their bodies on CO2, making them an ideal fuel source in the context of reducing global greenhouse gas emissions.

Algae are also a versatile source of organic matter for many different products, both in energy and for other uses. Many algae have a high lipid content in their bodies, the key characteristic that most algae-biofuel companies try to maximize. These lipids can be converted to biodiesel and jet fuel by fairly straightforward refining chemistry. Algae can also be induced to produce lipids with other characteristics that allow them to be used as a crude oil substitute or to produce gasoline substitutes like ethanol. Thermochemical processing (gasification, pyrolysis, combustion) can also be used to convert algae into another class of energy products such as syngas, diesel, jet fuel, butanol and electricity. In practice, algae could even be a coal-substitute as long as the modest amounts of sulfur and substantial nitrogen content can be safely managed.

Algae are also useful as a food crop. Some have excellent protein and fatty acid compositions that allow them to substitute for fish meal and other materials in feeds for aquaculture, poultry and pig farming. Some are great sources of nutraceuticals and food additives like astazanthin. In fact, the high value of these food products makes this an excellent alternative market for many algae companies, particularly those who can grow large amounts of a special strain of algae, but are struggling to make it cost competitive with fossil fuels.