Abstract Microalgae have reported to be one of the most promising feedstock for biofuel production. However, microalgal cultivation for biofuel production is a costly process due to the large amounts of water, inorganic nutrients (mainly N and phosphate (P)), and CO2 needed. In this study, we evaluated whether the nutrient-rich ash and flue gas generated in biomass power plants could serve as a nutrient source for Chlorella sp. C2 cultivation to produce biolipids in a cost-efficient manner. When ash was incorporated in the culture medium and photosynthesis was enhanced by CO2 from flue gas, Chlorella cultures produced a lipid productivity of 99.11 mg L−1 d−1 and a biomass productivity of 0.31 g L−1 d−1, which are 39% and 35% more than the control cultures grown in BG11 medium. Additionally, the cultures reduced the nitrogen oxide (NOx) present in the flue gas and sequestered CO2, with a maximum ash denutrition rate of 13.33 g L−1 d−1, a NOx reduction (DeNOx) efficiency of ∼ 100%, and a CO2 sequestration rate of 0.46 g L−1 d−1. The residual medium was almost nutrient-free and suitable for recycling for continuous microalgal cultivation or farmland watering, or safely disposed off. Based on these results, we propose a technical strategy for biomass power plants in which the industrial wastes released during power generation nourish the microorganisms used to produce biofuel. Implementation of this strategy would enable carbon negative bioenergy production and impart significant environmental benefits.