UPDATE 1-European lawmakers vote for more ambition on renewables targets

(Updates with energy saving targets)

STRASBOURG, France, Jan 17 (Reuters) - European lawmakers voted on Wednesday to ramp up climate goals in draft measures to reform the power market and reduce energy consumption, setting up tough talks with EU member states.

The proposal aims to help implement the European Union's climate goals of reducing greenhouse gas emissions by at least 40 percent below 1990 levels by 2030, in the wake of the Paris Agreement to limit global warming to no more than 2 degrees.

Voting on its position ahead of negotiations with EU nations on the final legislation, European Parliament backed setting a target for the bloc to reach at least 35 percent renewable energy of its overall use by 2030. National governments agreed last month on a goal of 27 percent.

Under the draft rules, parliament backed banning the use of palm oil, a major import Southeast Asian nations such as Indonesia and Malaysia, in motor fuels from 2021.

Lawmakers agreed on a binding overall energy efficiency target of 35 percent after 2021, compared to 30 percent non-binding proposed by member states last year.

The goals promote better insulation and energy use in buildings, more efficient consumer goods and smart appliances in homes.

Apart from any environmental benefits, the Commission estimates that a 30 percent target would create 400,000 jobs, increase European economic output by 70 billion euros ($78.30 billion) and reduce the continent's reliance on gas imports by 12 percent. (Reporting by Robert-Jan Bartunek; Editing by Alissa de Carbonnel)