In late 1990's some microalgae were found to be capable of producing lipids from carbon dioxide via photosynthesis with thirty times the efficiency of plants in terms of the amount of oil produced per unit area of the land allocated. This process raised hope in the fight against environmental problems caused by carbon dioxide accumulation in the atmosphere. In the present paper, exergetic efficiency of the environment friendly algal biodiesel production process and renewability of the algae-biodiesel-carbon dioxide cycle are assessed. If any process is not feasible thermodynamically, it can never be used in the real world: however, thermodynamic feasibility does not imply the immediate use of the process either. If the limits offered in thermodynamic analysis cannot be attained immediately with the present technology, they may still be used to understand the area where new technology is needed. This paper points the direction for the development of new technology to decrease the carbon dioxide accumulation in the atmosphere. The renewability indicator is found to be positive, showing that the algae-biodiesel-carbon dioxide cycle is indeed renewable. Any increase in the lipid content of the algae will improve the efficiency of the process. Genetic engineering techniques may be helpful to improve this efficiency drastically. (C) 2010 Elsevier Ltd. All rights reserved.