This method involves gluing rigid board insulation to the foundation wall and then covering it with a frame wall incorporating batt insulation. The result is higher insulation values with less loss of interior space, a very good reduction of thermal bridging and no need for an additional moisture barrier. It works best if the basement wall is even and vertical (i.e. poured concrete or concrete block) as the board is fairly rigid. Use only moisture-resistant board insulation such as extruded polystyrene or Type IV expanded polystyrene.
Preparation
Follow the preparations required in How to insulate inside the basement using only rigid board insulation.
Installation
Using rigid board insulation with at least RSI 1.76 (R-10), secure and seal it to the foundation by applying foam-compatible adhesive around the perimeter of the foam board before fastening it to the wall. If any mould were to develop behind the insulation it would be contained. Air sealing the foam board to the wall creates an air and moisture barrier somewhat equivalent to spray foam. Special mechanical fasteners can be used if you have any sensitivity to the glue. Install the insulation snugly to eliminate air circulation at the edges. Use urethane foam sealant and technical tape to seal all joints and intersections of the foam board.
Next, install the wood-frame wall directly in contact with the rigid board insulation. Follow the techniques detailed in Frame wall with single or double layer of batt insulation.
Adding additional insulation
The frame wall can now be roughed in for any wiring and plumbing and insulated as noted previously in Frame wall with single or double layer of batt insulation. For details on treating the joist area, see Joist header space.
Finishing
Do not use a polyethylene air and vapour barrier with this approach, as there is a risk of creating a double vapour barrier with the foam board. Instead, use either the smart barrier or the ADA method.
If you are using smart barrier, leave enough of the film at the top to connect to the air barrier in the joist space.
If you are using the ADA method, pay strict attention to proper air and vapour sealing, including a layer of vapour barrier paint. Any exposed foam insulation may require fire protection as per code requirements.