Microalgal based biofuels are discussed as future sustainable energy source because of their higher photosynthetic and water use efficiency to produce biomass. In the context of climate CO2 mitigation strategies, algal mass production is discussed as a potential CO2 sequestration technology which uses CO2 emissions to produce biomass with high-oil content independent on arable land. In this short review, it is presented how complete energy balances from photon to harvestable biomass can help to identify the limiting processes on the cellular level. The results show that high productivity is always correlated with high metabolic costs. The overall efficiency of biomass formation can be improved by a photobioreactor design which is kinetically adapted to the rate-limiting steps in cell physiology. However, taking into account the real photon demand per assimilated carbon and the energy input for biorefinement, it becomes obvious that alternative strategies must be developed to reach the goal of a real CO2 sequestration.