Since $CO_2$ concentrations in industrial flue gases are usually 10%-20%, one of the prerequisites for efficient $CO_2$ removal by algae is the level of tolerance of microalgal species to exposure to high concentrations of $CO_2$. A newly isolated microalgal strain, Chlorella sp. MRA-1, could retain growth with high concentrations of $CO_2$ up to 15%. The highest lipid productivity for Chlorella sp. MRA-1 was 0.118 g/l/day with a 5% $CO_2$ concentration. Octadecenoic acid and hexadecanoic acid, the main components of biodiesel, accounted for 70% of the total fatty acids. A lipid content of 52% of dry cell weight was achieved with limited amounts of nitrogen. Chlorella sp. MRA-1 seems to be an ideal candidate for biodiesel production when cultured with high concentrations of $CO_2$.