Insulating the line is very easy. Just replace the old single wall vent pipe
with B vent. It is double walled for insulation, fairly inexpensive and
adapters are readily available to attach to the top of the water heater. Elbows
are available to handle any bends.
This is one of the main reasons for B vent, to maintain flue gas at a higher
temperature for proper draft. Everything you need is at any Home Depot.
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