Algae can be made into a variety of biofuels, including biodiesel, ethanol, algae, and biogas. To add to your analysis, here are some pros and cons to algae as fuel:

PROS:
Algae grows in all directions
Single celled with no superstructure required for algae (roots, trunks, leaves)
Growth speed: 140 days for land crops; algae grows year round & mature in just 1 or 2 days
Algae weathers extreme conditions well, so resistant to drought, wind, rain, and insects
Grow 30-100 x more oil per acre than corn or soybeans
No sulfur, non toxic, biodegradable
Can mix with existing fuels in existing vehicles
Can also produce fuel, bioplastics, medicine, nutrition, animal feed, fertilizer, and more
Can absorb CO2 and other pollutants from coal power plants, cement manufacturing, fossil fuel extraction and refining, fermentation based industries, ethanol production, etc

CONS:

Scale – difficulty replicating lab results into larger volume of production

Growing – using open ponds are easily contaminated, PBR’s (photobioreactors) can be expensive (there are much more affordable options, read on!)

Processing – challenges to harvesting and extracting oil

Carbon Capture – is it really feasible? Can the algae keep up with the output of the factory, and what about during the night when algae is not active? Can the waste be reliably transferred into the algae; are the right growing conditions and enough land there alongside the plant to cultivate the algae? (“to fully use the emissions from a 50 MWe natural gas fired power plant land would require 2200 acres of algae.”) Additional nutrients are still required, such as N, P, or K, which must be added in precise amounts and typically come from chemicals like ammonia or nitrate and phosphorous. Taking into consideration all of the processing, is there really a net reduction or capture of CO2? Also, capturing the emissions it is not true sequestration, as the carbon used will be burned again as fuel.

Differing results from various strains, environmental conditions, and growing systems

If chemicals are used to extract oil or process fuel, some materials in exhaust can be toxic

Environmental Concerns – if major cultivation takes place, especially of GM (genetically modified) algae – what if it gets into the environment and seriously disrupts the ecosystem?

I still think there is enough evidence to suggest that this is the right direction for us to take, however there are still challenges. The Algae Revolution is upon us; I think we will be seeing amazing breakthroughs every day.

To learn how to make algae biofuels, check out:
Algae to Biodiesel: http://www.organicmechanic.com/algae-to-biodiesel/
Algae to Ethanol: http://www.organicmechanic.com/algae-ethanol/

And for a look at the broad range of goods possible from algae and considerations for how to scale them up into entrepreneurial pursuits, check out Algae Business:
http://www.organicmechanic.com/algae-business/

Let me know if there are any questions about algae, or equipment to cultivate and use biofuels! http://www.OrganicMechanic.com provides a wide range of green technology solutions to make it easy to Go Green!

Chris