It is hard to describe the putrid stench of the decaying sargassum seaweed blanketing miles of shoreline in Soubise, a fishing village in Grenada. The pungent odour wafts into passing vehicles, persisting long after they have left the Caribbean island’s coves, where the ocean has deposited masses of the seaweed, which turns red then black as it rots.

Many residents of Soubise, one of the areas worst affected, say they have learned to live with the problem, which has plagued the island, and others like it, for years. Last week scientists in Florida said they thought they had identified a weather phenomenon in 2009 as the “tipping point” of the problem, which they said is caused by shifting winds churning up the ocean and bringing deepwater nutrient concentrations to the surface.

Every day, Lindon Marast, 30, feels the ill effects of the sargassum invasion when he goes out to fish. “It gets caught in the boat’s propeller,” he says. “Then we can’t pass through the water because it stops the propeller from accelerating.”

• Lindon Marast says the seaweed clogs the engine of his boat

But now Grenada’s government says it has found a way to turn the curse of sargassum into a blessing. It is working with the European Union and is looking for companies that could partner them in creating a multibillion-dollar market for the Caribbean.

The aim is to rebrand the seaweed as a revolutionary solution to the climate crisis that could power homes and businesses with clean energy and boost agricultural yields.

“We have had to deal with this problem for quite some years now,” says Emmalin Pierre, a local MP and leader of the opposition New National party. “It has been a major problem for not just the fishermen in the area but also residents.

“The fishermen will tell you it’s challenging to even access their boats when it’s really bad. You also have the issue of the scent, which sometimes becomes unbearable even for passersby.”

Soubise’s residents, who are facing severe coastal erosion as well as the invasion of the sargassum, have also expressed concerns about the effects of methane and other gases emitted by the weed, which they say cause skin rashes, tarnish jewellery and damage household appliances and boats.

• The fishing village of Soubise, where some say the rotting seaweed causes skin rashes

The sargassum issue has blighted the island for more than a decade, but now UK-based aquaculture business Seafields has created a water-based farm to catch the sargassum before it reaches land, preventing it from rotting and releasing methane.

Seafields claim its solution could save Caribbean governments and hotels hundreds of thousands of dollars in sargassum removal and support a lucrative market in bioplastic and similar materials.

As well as its use in creating bioplastics, sargassum can be used as a fuel and as crop fertiliser. It is much cheaper to farm than most other seaweed, says John Auckland, founder and chief executive of Seafields. Unlike other macroalgae, it does not have a complicated reproductive cycle that requires hatcheries and lots of space, money and infrastructure to farm. This makes sargassum a valuable resource for the Caribbean.

Used as a fertiliser, he says: “It stimulates crop growth by about 10% to 14% and can significantly increase yields for farmers.

“It has slightly different applications than traditional bio-stimulants. So it’s a potential $200bn [£150bn] export market – and the Caribbean has the best product for it.”

Some hotels in Grenada are already using sargassum as a clean energy source. Benjamin Nestorovic and Renatta Fielden, from the Grenada-based bioenergy company SarGas, have proved the technology works and have installed a biodigester, which uses micro-organisms to break down the seaweed into biogas and fertiliser, to fuel the ovens at the True Blue Bay Resort’s House of Chocolate bakery in St George’s.

“You can eat chocolate with a good conscience,” Nestorovic says. “Our process produces clean energy and digestate – a valuable organic fertiliser – giving us two products in one.”

• Benjamin Mestorovic and Renatta Fielden. Their company, SarGas, launched a pilot project at Grenada’s True Blue Bay resort three years ago to assess the feasibility of turning sargassum seaweed into biogas and fertiliser

• The biogas digester. Seaweed, manure and food waste is fed into the funnel to be turned into fuel and fertiliser

• The converter’s gas outlet and valve. A small digester can supply six hours of fuel a day to farms, hotels and cafes

The company has recently secured government approval to construct a large-scale biogas facility to help provide electricity to the island.

“They use diesel to generate electricity [now], which is very expensive for the local population. We are providing a reliable, cost-effective and sustainable alternative,” Nestorovic says, adding that the company plans to expand across the Caribbean.

• As well as fertiliser and biofuel, sargassum seaweed can also be turned into bioplastic

Grenada’s prime minister, Dickon Mitchell, held a conference last year to explore innovations around sargassum weed. Speaking at the event, he said: “We believe that we have a unique opportunity in Grenada and in the Caribbean basin to turn the tide on what is viewed as a problem into a solution – and into a solution that can have ripple effects to all of the stakeholders that it has thus far negatively impacted.”

Mitchell set up a taskforce to work with the EU, and has promised to collect 10,000 tons of sargassum by 2026. Last month, he told the Guardian that he had launched an expression of interest process for companies to propose projects to make his goal a reality.

Meanwhile, farmers and fishers on the island have already discovered positive uses for the weed. “Sometimes it comes in with a lot of fish like mahi-mahi,” says Mark Nedd, 30, who started fishing at 14 and has grown up battling the sargassum invasion. Farmers, he says, collect it to use as fertiliser.

Hotels and the rest of the tourism industry are equally keen to find a way to deal with this persistent threat. Kirl Grant-Hoschtialek, chief operations officer of the Grenada Tourism Authority, describes the painstaking process of removing the weed from beaches.

Teams of people, she says, work from one end of a beach to the other to remove the weed by hand because heavy machinery is likely to deplete the sand and organisms within it, worsening coastal damage.

“Our beaches are our pride and joy,” she says. “Some have received accolades year after year. So we are very proactive when it comes to protecting them.”

For those who live in Soubise, such as Nedd, any effort to tackle the weed cannot come soon enough. “If you pass here in a vehicle, the vehicle will automatically take that scent and carry it for a good way,” he says.

“Some people say you get accustomed to the smell, but you can never get accustomed to it.”