What is the best way to insulate the exterior of a log home?

Insulating the outside of a log house in a cold climate is a smart idea, as wood is generally considered to be only about R1 per inch. Typically log homes don’t have vapor barriers and they work fine, but anytime you modify a building envelope you should be cognisant of how that may affect the movement of moisture, if at all.

Log homes are not a particularly dangerous in that respect as wood itself is something of a natural vapor barrier, but something to be aware in general for adding insulation to the exterior of buildings is the ‘2/3rds rule’. That rule is a general guide line to the optimal location of a vapor barrier in any cold climate that also required cooling in the summer months, because on hot humid days when you have the AC running, the vapor barrier is effectively on the wrong side. Here is a page with options that may be relevant to you –

How to install exterior insulation on older homes

Options that to me make sense in your case, would be either installing mineral wool insulation or rigid EPS foam. Mineral wool lets the moisture move right through it, EPS foam would be a perfect 2/3rds vapor barrier. That would be assuming you install at least 4 inches (about R24) if you have an 8 inch wall.

This particular option for attaching rigid EPS foam panels to the exterior of a house has a metal rail in the center of the panel that lets you attach them without long expensive screws that cause thermal bridging. 

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