Algae biodiesel is made in a similar fashion to all other biodiesel. The main difference of course being that algae biodiesel is made with algal oil, not vegtable oil or animal fat.

Once the oil is harvested from the algae, it is combined with an alcohol such as methanol (or ethanol) and a catalyst. A chemical reaction occurs creating a methyl esther (fancy name for biodiesel) and a co-product calledglycerine. The glycerine is separated from the biodiesel and any residual alcohol is recovered from a distillation process and used again. The glycerine can be used for many things such as lotions and cosmetics.