Biofuels provided 2.7% of world’s transportation fuel in 2015 which is expected to rise to 28% by 2050. However, most of the biofuel produced till date is from crops that can be used as food or feed. Microalgae, or third generation biomass, has the potential to overcome the problems associated with the food vs. fuel debate. Microalgae are microscopic photosynthetic organisms which have the ability to fix CO2. Thermochemical conversion via hydrothermal liquefaction is a favourable technology for recovering energy from algal biomass. Research is focused on discovering a viable and sustainable feedstock by cultivating and up-scaling the use of microalgae and then utilizing hydrothermal liquefaction to produce a workable biofuel. Synthetic biology and several genetic engineering techniques have also shown promising results in the production of biofuels. Much research is being carried out using microalgae as biomass for biofuel generation; however, it needs a robust conversion technology to make the process commercially viable.