Microalgae can be used as a biological photocatalyst to reduce the CO2 levels in the atmosphere, with the advantage of not competing with food crops for arable land, and thus offer a potential method for limiting climate change. Microalgae have also been proposed as a sustainable fuel source. This study investigated the microalgae harvest yields, the thermogravimetric behavior of both microalgae oil and microalgae residue, the torrefaction of microalgae residue, and diesel engine tests using diesel-microalgae biodiesel blends. The mean annual harvest rate of microalgae oil in open ponds was found to be 4355 kg per 10000 m2. Compared with conventional diesel, the fuel blends - B2 (2% microalgae biodiesel + 98% conventional diesel), B2-But20 (B2 + 20% Butanol) and B2-But20-W0.5 (B2-But20 + 0.5% water) showed a reduction of 22.0%, 57.2%, and 59.5% in PM emissions, and a decrease of 17.7%, 31.4% and 40.7% in BaPeq emissions, while B2-But20 and B2-But20-W0.5 had reduced NOx emissions, of approximately 25.0% and 28.2%, respectively, but B2 showed a 2.0% increase in NOx emissions. Conversely, the addition of water and butanol fractions in diesel increases HC and CO emissions, although these can be easily removed using tailpipe catalysts and absorbers. In addition, torrefaction of microalgae residue results in solid, liquid and gas products. This study is the first of its kind to report the liquid compositions from the torrefaction of microalgae residue. The condensate liquid products contained glucose molecules like 1,4:3,6-Dianhydro-α-d-glucopyranose, and furfural, limonene, pyridine, levoglucosan, and aziridine, among others. These compounds can be utilized as microalgae value added products, and applied in specialty industries as pharmaceutical, cosmetic, or solvent raw materials. Briefly, microalgae not only offer benefits in reducing CO2 from the atmosphere or providing raw materials for biodiesel production, but microalgae residue can also be treated via torrefaction to produce biochar. Based on the results of this study, more research is recommended on the economic potential of using both solid and liquid products from microalgae torrefaction.