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I am currently insulating my basement. I left the studs far enough away from the concrete wall so I can put r20 in without it compressing. My main question is there is enough space between the studs for a piece of r12 insulation if I cut it, should I do this to reduce thermal bridging or is it useless?

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I highly recommend reading some articles at buildingscience.com: Especially Basement Insulation systems: buildingscience.com/documents/reports/… and about vapor barriers: buildingscience.com/documents/digests/… – gregmac Feb 5 '11 at 3:25
completely agree with greg. If you can, use XPS or EPS board insulation. Metal studs. – DA01 Feb 9 '11 at 3:37

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Assuming your basement is dry, no moisture problems etc. and also assuming you are talking about blanket fiberglass insulation, here is my answer. The amount of work required to put one and a half inch wide slivers of insulation behind each stud is a total waste of time. "R" value on vertical walls is actually not as important as trapping air and preventing drafts. Don't get me wrong, the more "R" the better, but the majority of heat loss is up and compromised by cold air drafts. Just install insulation between studs, you will be fine. Remember, in your case, the vapor barrier goes between the concrete and insulation, not under the drywall on top of the studs.

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I would agree with this to a point. IMHO, thermal bridging to the outside wall is still an important factor to keep in mind (granted, less important as vertical heat loss and cold drafts as you say). If you already have space behind the studs (they are not in contact with the foundation wall) that is enough to give you that thermal break. So it is overkill to cut little strips to put behind each stud. – auujay Feb 4 '11 at 21:44
@shirlock Can you please verify your vapour barrier statement? Installing it on the cold side of insulation goes against everything I've read on the topic -- though it also may depend on climate. – gregmac Dec 2 '11 at 4:17
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You could consider getting spray foam insulation as it will fit in readily between and around the studs. Usually this is something you would have a pro do, etc.

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This is the way I went two years ago, I'm extremely happy with it. gregmaclellan.com/blog/basement-insulation. Another good blog post on the subject: oneprojectcloser.com/basement-wall-insulation-options. – gregmac Feb 5 '11 at 3:24

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