SIPs have a place in green building, but they also have downsides and limitations. I think it's doubtful that they will replace stick framing in any significant way.
Regarding your concerns about indoor air quality,
- Agriboard uses straw as the SIP core, rather than foam.
- Formaldehyde-free OSB is also available, and that would reduce emissions.
- You should check with your SIP supplier to see if that's an option, and if the supplier uses formaldehyde-free glue to affix the OSB skin to the core.
In the bigger picture, many other factors might be more important in terms of indoor air quality, such as finish materials and air exchange.
For more on this, read GreenHomeGuide's tips article "Achieve Energy Efficiency and Maintain Indoor Air Quality."
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