When Chicago schoolteacher Nick Limbeck arrived for his first classes at the Gallistel Language Academy, a state-run school on the city’s far southeast side, he was surprised to find that his second-grade classroom was filthy.

A wet-wipe passed over the windowsills, or over his seven-year-old students’ desks, came away pitch black – and no matter how often Limbeck scrubbed the room clean, the dirt kept coming back. “You could leave it for a week, and wipe it down again and it would be completely covered in black soot”, he says.

The reason, Limbeck says, soon became obvious. Looking out from his classroom windows, over the rooftops of his students’ homes, Limbeck could see, about a mile away, what looked like a range of dark, rolling hills the same colour as the grime he was wiping off his students’ desks.

The black mounds, more than 18 metres high in places, were actually uncovered heaps of petroleum coke, or petcoke – a powdery waste product left over from refining heavy oil into lighter, more sought-after fuel grades.

Petcoke – the coal substitute that’s dirtier than coal

In recent years oil companies, hoping to wring cash from the sludgy bitumen found in Canada’s tar sands and Venezuela’s Orinoco belt, have been busily installing coking equipment in their North American refineries: about half of the 140 or so operating refineries in the US are now equipped to handle heavy oil.

That’s led to a corresponding surge in US petcoke production, which has nearly tripled since the early 1980s, reaching a record-breaking 5.28 million tonnes a month this summer.

Globally, petcoke production rose almost 7% last year alone, according to Jacobs Consultancy data, reaching a record 124 million tonnes a year, despite many refineries not running their coking machinery at full capacity.

The petcoke boom has proved lucrative for refineries and their trading partners. Petcoke looks and burns much like coal dust, and as an abundant waste product can be piled high and sold off cheaply to power industrial furnaces and coal-fired power plants.

Petcoke typically trades at about a 25% discount to coal, providing refineries with a revenue stream that makes processing heavy oil more profitable, while also helping coal-fired power plants to reduce their operating costs.

That could help to keep America’s ageing coal plants in operation longer, slowing the transition to a low-carbon economy, says Lorne Stockman, research director of Oil Change International.

To make matters worse, petcoke doesn’t burn cleanly, and pound-for-pound produces more than half again as much carbon dioxide as coal.

It’s an abundant resource – but can the planet handle it?

If all the proven tar-sands reserves beneath Alberta were to be refined, we’d be left with more than 4.5 billion tonnes of petcoke on our hands – enough to fuel 111 standard US coal-power plants until 2050, according to a recent Oil Change report. “It’s a national, continental problem”, Stockman says.

With US regulators currently excluding petcoke-related emissions from their assessments of the climate impact of heavy-oil pipelines such as Keystone XL, Stockman fears the US could be locking itself into a high-carbon trajectory for decades to come.

Efforts to rein in the use of petcoke at US power plants won’t help much, either, Stockman says, because of the growing global demand from industrial buyers in China, India, Mexico, and other countries with lax air-pollution regulations.

The US exported more than three quarters of its fuel-grade US petcoke production last year, according to Jacobs Consultancy, accounting for about 90% of the international petcoke trade. That essentially allows refineries to duck US emissions rules and outsource their carbon emissions, Stockman warns.

And while America’s environmental and health regulators scramble to keep up with the booming industry, millions of tons of black powder continue to pile up in loosely regulated storage facilities across the Midwest, and around major export hubs in California and along the Gulf Coast.

Welcome to Slag Valley, SE Chicago

Many of the petcoke dumps are located in poor, post-industrial neighbourhoods which, like Chicago’s southeast side, are no stranger to environmental problems.

The area where Chicago’s petcoke dumps stand is known to locals as ‘Slag Valley’ – a historic dumping ground for the huge steel mills that crowded around the brown waters of the Calumet River for most of the 20th century.

The mills have long gone, but the neighbourhood still has cancer rates more than 50% higher than the citywide average, and among the highest infant-mortality and lead-poisoning rates in the region.

Still, residents are making the best of their corner of the Rust Belt: baseball diamonds, play-lots and tree-lined suburban streets now jostle for room alongside the remaining factories, scrapyards and rusting bridges, and locals talk gamely about attracting wind-turbine manufacturers and other green employers to the area.

That’s what made the arrival of petcoke so upsetting, says Peggy Salazar, director of the Southeast Environmental Task Force, a coalition of neighbourhood activists. In 2012, Salazar and other Chicago activists won a big victory by using concerns over air pollution to derail plans to build a coal gasification plant on the site of one of the old steel mills.

That gave locals hope that the community was turning the corner – but within a matter of months, Salazar says, people began noticing uncovered barges and trucks dumping huge quantities of petcoke along the banks of the river.

Soon afterwards, they began noticing fine black dust wafting through their streets, leaving dark, greasy stains on their homes and even on their children’s faces. “It’s just a blight on the community”, Salazar says.

BP’s refinery waste blighting poor neighbourhoods

Chicago’s petcoke mountains come largely from BP’s colossal Whiting refinery, located a few miles outside the city, which last year finished installing new equipment tripling its coking capacity, allowing it to produce more than 5,400 tonnes of petcoke a day.

Most of the refinery’s output is sold to KCBX Terminals, a Koch Industries subsidiary owned by conservative billionaires Charles and David Koch, and stored at two sites in southeastern Chicago.

Thanks to lax environmental regulations in Illinois, and the absence of federal rules governing petcoke storage, KCBX has been allowed to store petcoke in open, uncovered mounds that dwarf the residential homes that stand just a few metres from the edge of the storage facilities.

When the wind blows, locals say, the black dust is whipped up into the air, and rains down onto the surrounding area.

Olga Bautista, a community organiser who lives about a mile from the petcoke mounds, says she and her neighbours regularly have to use high-pressure hoses to wash the black petcoke dust from the outside of their homes.

Worse, whenever Bautista opens her windows, she finds the fine black powder collecting in the corners of her bedrooms. “It’s kind of sticky – you have to keep cleaning and wiping and mopping”, she says.

Bautista says that when her children play outside, they often come in covered in black grime that’s hard to scrub off. She’s seen little league games abandoned because people mistook the plumes of dust rising off the plants for smoke, and assumed there was a fire in the neighbourhood.

Another time, a friend’s outdoor birthday party was disrupted after petcoke dust showered greasy black dust onto both the party snacks and the guests. “It’s very insulting to the community”, Bautista says. “They aren’t worried about our safety … we’re breathing this stuff, and it’s getting into our homes.”

A toxic cocktail of heavy metals and aromatic hydrocarbons

KCBX representatives say that they installed a new $10 million dust-suppression and sprinkler system after taking over the Calumet River storage facility, and that they’ve had no serious problems at the site.

Still, on one windy day last August, locals snapped photos of an enormous dust cloud rising off the company’s petcoke piles, darkening the skies over Chicago’s southeast side.

And earlier this year, the Environmental Protection Agency issued a notice of violation to the Koch terminal, after finding that air-pollution levels at EPA-mandated monitoring equipment around the facility’s perimeter had exceeded federal standards. KCBX disputes the EPA’s violation notice, which is still under adjudication.

Either way, locals say the plumes of dust and insidious grime coming from the KCBX facility raise serious health concerns. Limbeck, the school teacher, says several children in his class suffer from asthma that he believes is exacerbated by the toxic dust.

There’s evidence to support Limbeck’s concerns: studies have found petcoke to contain heavy metals such as nickel, vanadium and selenium, in addition to polycyclic aromatic hydrocarbons, which have been linked to heart disease, childhood cancers, developmental disorders, and other health problems.

A federal air-monitoring station atop George Washington High School, just a few blocks south of Limbeck’s school, routinely registers among the highest levels of heavy metals and other dangerous air pollutants in Illinois. “These are innocent children, and they shouldn’t be exposed to this just because they live in a working class neighbourhood”, Limbeck says.

KCBX: ‘no evidence of harm’

KCBX argues that petcoke is non-toxic, and says there’s no evidence of any health problems being caused by its storage facility.

It’s true that it’s hard to link specific people’s health problems back to the presence of petcoke in their community, says Brian Urbaszewski, environmental health program director at the Respiratory Health Association of Metropolitan Chicago.

Still, that doesn’t excuse exposing communities to the black dust. “Someone living in their home shouldn’t be dealing with clouds of black dust coming in every time the wind picks up”, Urbaszewski says. “No matter where you live you deserve basic health protection.”

Scores of studies have shown a causal relationship between the presence of particulate matter, like that blowing off KCBX’s petcoke piles, and increased respiratory health problems in surrounding communities, Urbaszewski adds.

“Whenever particle levels go up, you see more asthma attacks, more chronic pulmonary disease, more respiratory emergency room visits and hospitalisations. To say that fine particles don’t cause health problems is laughable.”

Regulation on its way – but mind the ‘waivers’

Municipal leaders in Chicago, at least, appear to be listening. Warnings from health workers, well-organised activism from local residents, and photos of black clouds of dust billowing over the city led Mayor Rahm Emanuel to propose a new ordinance banning new petcoke facilities, and to the Chicago Department of Public Health implementing new rules for KCBX’s existing facilities.

A third, smaller petcoke site, run by a local industrial storage company, voluntarily closed its operations this fall rather than deal with the city’s new approach to oversight.

Among the city’s new rules: a roof over the top of all petcoke storage facilities, and better-enclosed facilities for transferring petcoke to rail wagons and barges, in a bid to eliminate the ‘fugitive dust’ plaguing nearby residents.

That’s a good start, says Salazar, the Southeast Environmental Task Force campaigner. Locals would prefer an outright ban on petcoke within city limits, she says, but failing that, covered storage sites should help mitigate health concerns – if the rules are implemented as planned.

The city’s leaders are allowing companies affected by the new framework to apply for variances on a case-by-case basis, Salazar notes, and KCBX has already applied for waivers for many of the proposed rules, and for extra time in which to implement the remainder.

Even if Chicago succeeds in forcing KCBX to clean up its act, it’s hard to effectively tackle petcoke pollution through piecemeal, municipal-level efforts, says Henry Henderson, Midwest program director for the Natural Resources Defense Council, and a former environmental commissioner for the city of Chicago.

Lobbying efforts stepped up

Activists in Detroit successfully convinced city leaders to stop Koch Carbon, another Koch Industries subsidiary, from storing petcoke at an improperly permitted facility earlier this year. But in the absence of federal and state-level oversight, the companies involved simply shifted their operations to less well-regulated sites in other cities.