Plastic generally releases highly toxic gases when burned, such as dioxins (for certain plastics, not all) and carbon monoxide, which are linked to various health problems. While some people have used plastic bottles to insulate their homes (see second link below), it might be safer to recycle the bottles and find some other kind of eco-friendly insulation. Electrical problems and fires happen too often near insulation, and you might not want to risk burning the plastic.
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