It doesn't make the coal any cleaner in my mind but is a efficient source of carbon-dioxide rich gas for a green energy fuel.

The carbon needs to be taken out of the cycle to be considered "green", I just don't think there are any inexpensive and good ways to do that.

It could be a halfway decent sequestration policy if the fuel from the algae is, as the article indicates, used to power the plant. Which in turn would capture the CO2 once again to grow more algae, which is in itself burned and recaptured ad infinitum...

Any extra energy produced by the algae fuel from this plant displaces fossil fuel burned. Going closed loop on the plant would result in sunlight as the only energy input, creating a solar electric plant with year-scale storage capacity.

If you don't like this idea, then you can't be in favor of greater efficiency in our transportation sector. The same argument would have to be made that hybrid cars are not "the" solution, because they still burn oil.

We need to squeeze more utility from each energy source, including coal.

This is emissions from existing coal plants, people! They'll be burning coal, anyway, and no new plants will be built in order to accomodate the algae. So what's the issue? We get biofuel and less destructive coal plants. Then, once they're shut down, we can move onto electric cars...

Where does the sulfur go?

At best its double duty carbon if its burned in transport. However if its an algae oil fuelled power station then that gets very significant. Every ton of biomass fed in is a ton of coal not burned and its always smart to use existing infrastructure to do green energy rather than scrapping the old and building new with a great waste of embodied energy and money.

@ Wesley Bruce: It's not necessarily a 1:1 relationship, a ton of algae biomass replacing a ton of coal.

While I can quote the energy stats for biodiesel from algae or any other feedstock off the top of my head, finding studies that look at how much biomass from algae is needed to replace a given quantity of coal seem thin on the ground. There are plenty that deal with co-firing from other biomass sources and all these indicate that you need a much greater volume of a given biomass to equal the amount of energy produced from coal. While this doesn't dim my enthusiasm for biomass for electricity, it doesn't do anything to convince me that co-firing algae biomass and coal is green.

Using the CO2 to feed algae can make the algae grow much more profusely. The warmth from the reactor can also help growth, in cooler climates.
The algae need not only be producing fuel, but protein, carbohydrates, vitamins, chemical feedstocks and other materials. All more efficiently than if relying on the CO2 in the air alone.
If you are not producing food, the algae can grow better if you bubble the exhaust through secondarily-treated sewage. This will make a useful algal bloom in the reactor, instead of a damaging one in the wild.
I wonder if the people slagging the idea of algal sequestration are the same ones who are saying we should be generating more electricity from methane? Methane use means some methane leakage, and methane is 10 - 20 times more powerful than CO2 as a greenhouse gas. (The exact ratio depends on the time frame you are considering)
Using coal and bio-reacting the byproducts will probably cause less global warming than relying on methane for power. It can produce useful byproducts as well.
Our future lies with integrated systems, and the optimal processes for integration are not necessarily the most-efficient standalone processes.