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* EU to bolster climate action by cutting CO2 permits
* If meet efficiency, green target would pass emissions goal
* Meeting efficiency goal needs extra 270 bln euros annually
(Adds details on emission cuts' targets, paragraph 5)
By Juliane von Reppert-Bismarck
BRUSSELS, March 7 (Reuters) - The European Union will fall well short of a target to sharpen its energy efficiency by 2020 on current trends, its executive Commission said on Monday.
The Commission will stick to a plan to tighten the supply of emissions permits to its carbon market, in a proposal it will publish on Tuesday, as it tries to shore up action to fight climate change.
The Commission is due to publish its "Climate Roadmap to 2050" on Tuesday which will detail how to slash greenhouse gases by the middle of the century.
"The latest analysis shows we are on target for 10 percent," EU Commission spokesman for the climate division Isaac Valero Ladron told Reuters, referring to the non-binding goal to improve efficiency by a fifth compared with 1990 levels.
Meeting the EU's goal of cutting greenhouse gas emissions by 80 percent by 2050 will require an extra 270 billion euros annually, or 1.5 percent of EU economic output or GDP.
Tuesday's roadmap will include a new plan to remove, or set aside, several hundred million tonnes of emissions permits from 2013-2020.
That measured appeared under threat earlier on Monday after squabbling between the energy and climate departments of the Commission, according to EU sources.
The EU emissions trading scheme caps emissions from factories and power plants by issuing a fixed quota of permits, which are now in surplus after a financial crisis cut pollution, causing carbon prices to fall.
"The concept of the set aside has been kept in the roadmap as the most effective way to achieve our energy efficiency targets," said Ladron.
"The size is something that has to be agreed at a later stage," he added.
An earlier draft proposed to remove 500-800 million EUAs from 2013-2020, the third trading phase of the EU's emissions trading scheme.
That compares with an annual allocation to industry of about 2 billion EUAs, each equivalent to 1 tonne of carbon dioxide emissions.
Removing surplus permits called EU allowances (EUAs), in tandem with meeting renewable energy and efficiency targets, could help the bloc pass a goal to cut carbon emissions by a fifth by 2020 compared with 1990 levels, EU officials say.
But a move to a tougher emissions target is contentious, as some European companies complain that they already face more rigorous climate regulations than competitors in other parts of the world including the United States, China and Japan.
Europe's biggest business lobby, Business Europe, was wary of steps which implied a move beyond a 20 percent emissions cut.
"It would have to be carefully analysed for the impact on business," said the group's chair on climate issues, Nick Campbell.
The group opposed the set aside concept, he told Reuters.
"We've strongly expressed it's a bad idea, it's a back door way of changing the target," "We've made our feelings strongly known that we don't like the set aside."
Reporting by Juliane von Reppert-Bismarck and Justyna Pawlak in Brussels, and Nina Chestney in London; writing by Gerard Wynn; editing by William Hardy email@example.com; +44 207 542 2302