PEOSTA, Iowa — As President Barack Obama sets out on day two of a three-day bus tour of the Midwest, the administration announced it is investing up to $510 million over the next three years to spur the use of advanced biofuels in the military.

The president will take part in a rural economic development forum at Northeast Iowa Community College in Peosta, west of Dubuque, today.

Before he arrived, the president greeted people on the streets of Decorah after he left his downtown hotel. About 100 people lined the streets, with one woman calling out: “We love you, we’re behind you.”

The president also was having breakfast with a handful of business owners at Rausch’s Cafe, in Guttenberg, before heading onto Peosta. The meeting was a chance for the president to hear directly from small business owners, the White House said.

All along U.S. 52, leading from Decorah to Guttenberg, towns prepared for the passing buses. Many streets were decked out with flags and barricades. Just outside Guttenberg, a small sign reading “Rick Perry” also stood out.

Perry, the governor of Texas, just announced he’ll run for president and plans to make a stop in Walcott today.

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On the biofuels initiative, the White House said the Agriculture and Energy departments have developed a plan to construct or retrofit several biofuel plants and refineries. The biofuels would be used by the Navy and Marines.

In a statement this morning, Obama said: “Biofuels are an important part of reducing America’s dependence on foreign oil and creating jobs at home.”

Already, the Navy has been experimenting with biofuels. The Navy has focused its attention on hydrotreated biofuels, according to a January article in National Defense magazine. Last September, the Navy ordered 150,000 gallons of algae-based fuel from a San Francisco-based company, according to the article.