Most of the anthropogenic emissions of carbon dioxide result from the combustion of fossil fuels for energy production. Photosynthesis has long been recognized as a means, at least in theory, to sequester anthropogenic carbon dioxide. Aquatic microalgae have been identified as fast growing species whose carbon fixing rates are higher than those of land-based plants by one order of magnitude. Physical Sciences Inc. (PSI), Aquasearch, and the Hawaii Natural Energy Institute at the University of Hawaii are jointly developing technologies for recovery and sequestration of CO{sub 2} from stationary combustion systems by photosynthesis of microalgae. The research is aimed primarily at demonstrating the ability of selected species of microalgae to effectively fix carbon from typical power plant exhaust gases. This report covers the reporting period from 1 October to 31 December 2000. During this period planning of chemostat experiments at Aquasearch was initiated. These experiments will be used to select microalgae for the photobioreactor demonstrations. An initial survey of techniques for removing CO{sub 2} from coal-fired flue gas was begun. Chemical adsorption using MEA is the most mature technology and looks to be the most economically viable in the near future.