Among the fossil fuels, diesel has the major share in petroleum product consumption. Diesel demand in Iran has increasingly grown due to the low price of diesel, a high subsidy, and an unsuitable consumption pattern. During 2006-2007, this growth imposed 2.2 billion liters of imports, which were equivalent to 7.5% of diesel production in 2007 and cost about $1.2 billion. Therefore, the government implemented fuel rationing in 2007 and a targeted subsidy law in 2010. These projects have not gained effective control of consumption due to the wide gap between the international diesel price and the domestic price. Diesel import after the implementation of fuel rationing and the targeted subsidy law in 2011 imposed 3.6 billion liters of import and cost about $2.2 billion. Therefore, the government will need fundamental strategies and policies to face and control the negative impact on the economy and the environment. Third generation fuels, biofuels, as another supplementary approach seems to have the capability to reduce the petroleum requirement. This paper investigates the potential of biodiesel as diesel alternative fuel from oil seeds and microalgae in Iran along with evaluating the policy for reducing diesel consumption. Dunaliella salina as an indigenous green microalga isolated from the Maharlu Salt Lake was cultivated in an integration of an airlift system and a raceway pond (IARWP) to prove microalgal potentials in Iran. Additionally, the natural culture medium from the Maharlu Salt Lake was utilized for Dunaliella salina in order to commercialize and reduce cultivation cost. Compared to oilseeds, microalgae because of their high lipid content have much potential to solve a fuel consumption problem. This paper found that only 21 percent of cultivable land is needed to replace the diesel currently consumed in Iran with microalgal biodiesel.