* EU executive wants 2020 end to environmentally harmful aid

* Commission paper urges shift to environment taxes

* Industry, activists criticise plan as too vague (Adds quotes)

BRUSSELS, Sept 14 (Reuters) - European Union policymakers may scrap subsidies for energy, water and transport and impose new taxes as they seek to curb use of finite resources and accelerate the shift towards a lower carbon economy, a draft text seen by Reuters on Wednesday showed.

The European Commission is expected to publish a 2050 “Roadmap to a Resource Efficient Europe” next week to lay out plans to limit waste and improve efficiency.

“Member states are invited to prepare plans and timetables to phase out (environmentally harmful subsidies, or EHS) as part of their national reform programmes,” the draft copy of the plan said, noting that state-backed programmes in the field of energy, transport and water often carry a negative environmental impact.

“The Commission will monitor and guide the phasing out of EHS in the European Semester as of 2012,” the draft says, adding that by 2013 aid decisions will be made on the basis of resource efficiency.

But with power over fiscal and parts of subsidy policy in the hands of national governments, and EU industry wary of adding more cost to production, it is unclear how much of the Commission’s roadmap will be adopted into national legislation.

“By 2020 (environmentally harmful subsidies) will be phased out, with transitional measures for people in need,” the draft said.

Europe’s environment chief Janez Potocnik admitted it could be hard to reconcile the conflicting concerns of environmentalists and industry and convince member states to adjust national policies along environmental lines.

But he insisted the roadmap would help the bloc’s drive toward long-term competitiveness and economic health.

“We talk about the idea, not a concrete proposal,” he said. “We have an enormous environmental debt. We have to start to repay it.”

NOT CONCRETE

Several future proposals promised in Wednesday’s draft will be limited to requests for EU governments to improve their resource efficiency, but they will stop short of concrete legislative proposals, which need approval from national governments and the European Parliament.

The draft will also suggest new fiscal and economic incentives for producing resource-efficient goods.

“By 2020 the shift to a share of environmental taxation in public revenues of an EU average of more than 10 percent …will create a level playing field and support the economy to achieve greater resource efficiency,” the draft says.

“Member states are invited to, within fiscal consolidation measures, shift taxation away from labour to environmental impacts,” it adds.

In 2012, the Commission will also propose new rules that would impose environmental requirements on big public works and infrastructure projects.

The draft drew criticism both from Europe’s business community and environmental activists -- with the industry warning of an excess of red tape and activists wanting stricter rules.

“The effect of these measures on competitiveness must be carefully checked. Let’s make sure fiscal policy for instance will not jeopardise the competitiveness of European industry,” said Alexandre Affre, senior adviser on environment and energy at business lobby BusinessEurope.

Activists dismissed the roadmap as inadequate, saying it ignored the environmental and political implications of Europe’s import dependence and was too weak on phasing out harmful subsidies.

“Resource efficiency is about reducing the EU’s risk of exposure to harmful activities that undermine its natural resource base and its future economic and social stability,” said Sanjeev Kumar of environment group E3G.

“Instead of outlining an action plan on how to reduce this risk the Commission has come forward with a collection of immature reflections without concrete action,” he added. (Editing by Barbara Lewis and Jason Neely)