The superstructure optimization of algae‐based hydrocarbon biorefinery with sequestration of CO2 from power plant flue gas is proposed. The major processing steps include carbon capture, algae growth, dewatering, lipid extraction and power generation, and algal biorefinery. We propose a multiobjective mixed‐integer nonlinear programming (MINLP) model that simultaneously maximizes the net present value (NPV) and minimizes the global warming potential (GWP) subject to technology selection constraints, mass balance constraints, energy balance constraints, technoeconomic analysis constraints, and environmental impact constraints. The model simultaneously determines the optimal decisions that include production capacity, size of each processing unit, mass flow rates at each stage of the process, utility consumption, economic, and environmental performances. We propose a two‐stage heuristic solution algorithm to solve the nonconvex MINLP model. Finally, the bicriteria optimization problem is solved with ε‐constraint method, and the resulting Pareto‐optimal curve reveals the trade‐off between the economic and environmental criteria. The results show that for maximum NPV, the optimal process design uses direct flue gas, a tubular photobioreactor for algae growth, a filtration dewatering unit, and a hydroprocessing pathway leading to 47.1 MM gallons of green diesel production per year at $6.33/gal corresponding to GWP of 108.7 kg CO2‐eq per gallon. © 2013 American Institute of Chemical Engineers AIChE J, 59: 1599–1621, 2013

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