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Lawrence

wrote:
Here's another challenge I'm facing with my basement walls I'm hoping
to get help with.

Should the insulation be placed up against the cement wall
leaving an air gap between the insulation and vapour barrier, or should
the insulation be placed flush with the 2x4's leaving a gap between the
cement wall and the insulation?

You want to use bats sized for your 2x4 wall. Ordinarily I dont think
it hurts much to compress a thicker bat slightly. In this case it can
be undesirable however since it will cause the bats to touch the
basement walls where they could pick up moisture. Better to have a gap
between the bats and the wall so that any water on the wall can have a
chance to dry out before it migrates to the wall. There are other
materials which might do a better job like blown in foam.