In recent decades, people all around the globe have been paying attention to the dire situation caused by pollution and climate change, which are both caused by human activities. Although carbon capture and storage (CCS) technologies were originally thought to be a viable solution to this concerning situation, they are now recognized as economically inconvenient and the environmental consequences they may have in the future are uncertain. On the other hand, microalgae-based biological CO2 capture is thought of as a captivating medium in order to repurpose the surplus carbon dioxide gas produced by fossil fuel combustion, vehicles, and natural disasters like volcanic eruptions, decay of organic matter, and wildfires. In addition, microalgae have the ability to collect carbon dioxide and convert it into biomass; it might then be used as a carbon source for making lipids in order to create bioenergy and other products with added value. These materials will hopefully one day serve as a more environmentally friendly alternative to transportation fuels made from petroleum in a way that doesn't interfere with or negatively impact the crops and food supply. This review focuses on biological carbon sequestration, influencing factors and methods to enhance microalgae's CO2 sequestration and genetic engineering's prospective aims for improving CO2 sequestration. We draw attention to difficulties with existing methods and looking forward with the intention of making a positive impact on environmental sustainability, achieving zero emissions, and valuing carbon dioxide for a circular carbon economy (CCE).