Sequestering carbon dioxide is considering a potential method to avoid the emission of CO2 into the atmosphere. Carbon neutrality has sparked a fresh focus on using microalgae for CO2 capturing because of its efficient use of environmental durability, solar energy, and capacity to transform microalgal biomass into biofuels or other useful items. Microalgae from the genera Chlorella and Scenedesmus are used for effective carbon sequestration. This review examines contemporary research on microalgae focusing on methods to reduce carbon footprints, including carbon concentrating in microalgae, biochar manufacturing, and extracting useful metabolites like biofertilisers and soil amendments. The purpose is to enhance soil and irrigation water quality for agricultural purposes and support sustainable urban development via the use of environmental engineering concepts for efficient wastewater treatment. Multiple findings were drawn from this review. Research on performance shown that microalgae are capable of capturing and storing CO2 at rates between 40% and 93.7%. The highest potential for biochar mitigation ranges from 2.4 × 109t CO2e to 3.9 × 109t CO2e per year. Studies show that microalgae are environmentally benign and effective in producing biofuel to capture CO2. Research on microalgal biomass production indicates that closed systems provide higher output and need lower plant capacity compared to open systems, although having higher operational costs. Closed growth systems provide advantages including easy control and adaptability, making them a cost-efficient choice for growing microalgal biomass and efficiently trapping CO2.