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Algae are considered the most promising third-generation biofuel feedstock, because algae can grow on wasteland, wastewater, and waste gas. Thus, they do not compete with any resources needed for other useful purposes. Understanding how to engineer algae-to-biofuel systems is critical if we have to succeed in meeting our future transportation fuel demands. This chapter presents the engineering fundamentals of the algae-to-biofuel process and also draws attention to the challenges we must overcome.