Durisol's insulated concrete forms are made with recycled wood waste.

Insulation manufacturers touted their products’ energy-saving attributes long before green building materials carved a niche in the construction industry. But as green building products garner increased attention from both venture capitalists and consumers, insulation companies are facing tougher questions about the overall sustainability of their products.

The insulation industry, by saving building owners money through energy savings and helping increase their comfort, has for a long time fared well in the marketplace. Insulation products have seen a 4 percent compounded annual growth rate in the past decade, and represent a $9.2 billion market, according to the National Insulation Association. The rising cost of oil, increased awareness of climate change and industry-led initiatives such as the 2030 Challenge in recent years led analysts to predict continued industry growth of 5 to 8 percent in the next decade.

But as programs such as the U.S. Green Building Council’s (USGBC) Leadership in Energy and Environmental Design (LEED) program establish a stronger foothold in the U.S. construction industry, many insulation manufacturers are being asked to prove they do more than just save energy.

Types of foam insulation made from extruded polystyrene (XPS) and expanded polystyrene (EPS) are one of the most common, and most controversial, types of insulation.

“Most insulation products are tied to the petroleum industry,” says Clark Brockman, LEED Accredited Professional (AP) and architect at Portland-based SERA Architects, referring to such foam insulation. “We have to decipher between bad and less bad.” The U.S. Environmental Protection Agency (EPA) has defined polystyrene as a possible carcinogen. And fiberglass, the most common and widely available type of insulation material, contains phenol formaldehyde, which has been classified as a known carcinogen by the State of California and the World Health Organization.

Owens Corning (NYSE: OC), one of the world’s largest insulation manufacturers with reported 2006 sales of $6.5 billion, has received widespread opposition from customers for its use of ozone-depleting chemicals in its process for manufacturing EPS rigid foam insulation. The Toledo, Ohio–based company was forced to revamp its formula for rigid foam insulation to appease residents in Gresham, Ore., where it is plotting a 50,000-square-foot plant.