Third generation biofuels refers to biofuel derived from algae. A third generation biofuel is algae fuel, also called oilgae. Algae are above all other feedstock when it comes to the potential to produce fuel. They can produce a diversity of fuel due to two specific characteristics of themselves. The first one is that algae are able to produce oil that can be easily refined into diesel or other components of gasoline. The other, more important, characteristic is their ability to be genetically manipulated to produce everything from butanol and ethanol to diesel fuel and gasoline directly.  Overall, algae can produce biodiesel, butanol, gasoline, methane, ethanol, vegetable oil, and jet fuel. But, in terms of fuel potential, diversity is not the only thing algae has going for it. Algae is also capable for producing outstanding yields. ‘In fact, algae have been used to produce up to 9000 gallons of biofuel per acre, which is 10-fold what the best traditional feedstock have been able to generate. People who work closely with algae have suggested that yields as high as 20,000 gallons per acre are attainable. According to the US Department of Energy, yields that are 10 times higher than second generation biofuels mean that only 0.42% of the U.S. land area would be needed to generate enough biofuel to meet all of the U.S. needs.’