In comparison with terrestrial-based biofuel crops such as corn or soybeans, microalgal production results in a much less significant land footprint due to the higher oil productivity from the microalgae than all other oil crops. Algae can also be grown on marginal lands useless for ordinary crops and with low conservation value, and can use water from salt aquifers that is not useful for agriculture or drinking. Algae can also grow on the surface of the ocean in bags or floating screens. Thus microalgae could provide a source of clean energy with little impact on the provisioning of adequate food and water or the conservation of biodiversity. Algae cultivation also requires no external subsidies of insecticides or herbicides, removing any risk of generating associated pesticide waste streams.  In addition, algal biofuels are much less toxic, and degrade far more readily than petroleum-based fuels. However, due to the flammable nature of any combustible fuel, there is potential for some environmental hazards if ignited or spilled, as may occur in a train derailment or a pipeline leak. This hazard is reduced compared to fossil fuels, due to the ability for algal biofuels to be produced in a much more localized manner, and due to the lower toxicity overall, but the hazard is still there nonetheless.  Therefore, algal biofuels should be treated in a similar manner to petroleum fuels in transportation and use, with sufficient safety measures in place at all times.
Studies have determined that replacing fossil fuels with renewable energy sources, such as biofuels, have the capability of reducing  emissions by up to 80%. An algae-based system could capture approximately 80% of the  emitted from a power plant when sunlight is available.  Although this  will later be released into the atmosphere when the fuel is burned, this  would have entered the atmosphere regardless. The possibility of reducing total  emissions therefore lies in the prevention of the release of  from fossil fuels.  Furthermore, compared to fuels like diesel and petroleum, and even compared to other sources of biofuels, the production and combustion of algal biofuel does not produce any sulfur oxides or nitrous oxides, and produces a reduced amount of carbon monoxide, unburned hydrocarbons, and reduced emission of other harmful pollutants. Since terrestrial plant sources of biofuel production simply do not have the production capacity to meet current energy requirements, microalgae may be one of the only options to approach complete replacement of fossil fuels.
Microalgae production also includes the ability to use saline waste or waste  streams as an energy source.  This opens a new strategy to produce biofuel in conjunction with waste water treatment, while being able to produce clean water as a byproduct. When used in a microalgal bioreactor, harvested microalgae will capture significant quantities of organic compounds as well as heavy metal contaminants absorbed from wastewater streams that would otherwise be directly discharged into surface and ground-water. Moreover, this process also allows the recovery of phosphorus from waste, which is an essential but scarce element in nature – the reserves of which are estimated to have depleted in the last 50 years. Another possibility is the use of algae production systems to clean up non-point source pollution, in a system known as an algal turf scrubber (ATS).  This has been demonstrated to reduce nitrogen and phosphorus levels in rivers and other large bodies of water affected by eutrophication, and systems are being built that will be capable of processing up to 110 million liters of water per day.  ATS can also be used for treating point source pollution, such as the waste water mentioned above, or in treating livestock effluent.