To achieve sustainable production of biofuel from microalgae, a well-optimized and sustained biomass production is prerequisite. The major factor determining the higher productivity of algae is the availability and uptake of CO for biomass growth. In this study, an improved CO sequestration method leading to improved biomass yields has been investigated. The ability of OH ions in fixing dissolved CO in form of HCO in algal growth medium was studied using a Chlorella sp. and scaled-up in a photobioreactor. It was observed that a critical concentration of 0.005 M OH is required for HCO formation and utilization by algae. HCO uptake was enhanced by 70.8% (in presence of 0.01 M NaOH) with a sixfold increase in growth rate compared with only CO system. In mineral carbon systems such as NaHCO and NaCO, increase in HCO uptake was enhanced by 65.4% and 63.4%, respectively. The maximum rate of CO fixation of 6.6 mg L h was obtained with 0.01 M NaOH which was 1.5 times compared with mineral carbon sources. The biomass from scale-up experiment contained 16.3% lipid (by weight) of which 75% is unsaturated fatty acids (in total lipids). This supports the idea that fixing the dissolved CO in the form of bicarbonate using alkali helps in increased biomass productivity rather than CO itself, forms a precursor for biodiesel, and increases CO sequestration in a cyclic process.