The global urgency to address climate change and reduce greenhouse gas emissions has driven the exploration of innovative technologies for carbon sequestration and renewable energy generation. Algae, with its rapid growth rate, high photosynthetic efficiency, and ability to thrive in diverse environments, has emerged as a promising solution. Algae can capture large amounts of atmospheric CO2, making it an efficient carbon sink, while simultaneously producing biomass that can be converted into biofuels and other renewable energy sources. This article examines the potential of algae in carbon capture and highlights its role in generating biofuels, biogas, and hydrogen. It explores key innovations such as algae bioreactors, open-pond systems, and the integration of algae with wastewater treatment for enhanced carbon capture. The multifaceted benefits of algae, including its fast growth, non-competition with food crops, and versatile applications, position it as a critical tool in the global transition to cleaner energy. However, challenges such as production costs, water requirements, and scalability must be addressed for large-scale adoption. The future of algae-based carbon sequestration and renewable energy generation lies in continued research and technological advancement, offering a sustainable pathway toward mitigating climate change while meeting energy demands.