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I'm aware there are fire safety and other regulations that ensure the various types of ceiling insulation on the market are safe to use. If I was to cut unwanted polystyrene packaging material into a flat-ish shape and spread it around the ceiling space, would there be any safety issues? How about with the loose chip-sized pieces that are sometimes used for packaging?

When it comes to installing it, there would be gaps between the pieces that would need to be filled with something to avoid convection reducing the effectiveness. Using some polyester, wool or fibreglass insulation to fill the gaps might help resolve this. Are there any other obvious (and safe and economical) options?

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    polystyrene is very flammable, and the smoke is very toxic. So yes, huge safety issues. To address gaps you might be better off with smaller pieces, or the opposite - reform it into big pieces that fill the cavities exactly. – Móż Aug 26 '14 at 6:08
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    Also, it might not be legal to do this - many housing regulations specify flammability/fire resistance of materials used in ceiling cavities. And your insurance company might react badly to "I piled flammable stuff in my attic and now my house has burned down". – Móż Aug 27 '14 at 1:51
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You are track of a useful idea here, but the ceiling space is not the place to use it. I have actually asked our local waste management municipality if it's realistic to pull a stream of waste styrofoam from the landfill sorting process. While they haven't asnwered me, because of styrofoam's low density, separating it should be straight forward.

The ceiling space is open. Styrofoam burns obnoxiously, as the comments above point out. When it is used in a building, most codes require that it have a fire protection barrier equivalent to 1/2" gyprock, and that's using it as a sheet material.

Here are a few ideas. Run with them, and remember me when you get rich.

  1. Chop to a uniform size, and use as an adjuvant to lightweight concrete. This would essentially replace vermiculite.

  2. Similar to above but use it as a spray on insulation on the outside of a foundation.

  3. Chop, clean and quickly mix it with acetone, possibly diluted with water, and press into sheets. These would have drainage built in, but despite the air circulation would still be several times the insulation value of dirt.

  4. Fuse the chips together with heat, and press into 1 x 1 x 4 foot lego blocks. While not code for houses, they may work very well for utility buildings. In the block making process score grooves in them, so a stucco coat can be sprayed directly on them without the need of mesh. Stock piling a million such blocks near New Orleans may help for emergency shelter next time a hurricane catches them with their shorts around their ankles.

  5. Similar, but as part of the fusing process coat them with sand, or finely ground beer bottles. This would protect the block from UV, possibly give them an attractive finish, and because of the sharp edges discourage rodents and small children from messing around with them.

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