Algae are a very diverse group of predominantly aquatic photosynthetic organisms that account for almost 50% of the photosynthesis that takes place on Earth. Algae have a wide range of antenna pigments to harvest light energy for photosynthesis giving different types of algae their characteristic colour. Early work done with algae contributed much to what is presently known about the carbon dioxide fixation pathway and the light harvesting reactions. The processes of photosynthesis in algae and higher plants are very similar. From among the three types of carbon dioxide‐concentrating mechanisms known in photosynthetic organisms, two types are found in different types of algae. Algae are proposed to play a role in the global carbon cycle by helping remove excess carbon dioxide from the environment. Recently, algae are recognized as a promising biodiesel source due to its efficient absorption and conversion of solar energy into chemical energy.