A method of utilizing hydrogen in synthesis gas production by forming synthesis gas from one or more carbonaceous materials, the synthesis gas comprising hydrogen and carbon monoxide; separating a hydrogen-rich product and a hydrogen-lean product from the synthesis gas to yield an adjusted synthesis gas product; and activating a hydrocarbon synthesis catalyst with at least a portion of the hydrogen-lean product. A system for carrying out the method is also provided, the system including at least one hydrogen extraction unit and an activation reactor operable to activate hydrocarbon synthesis catalyst, wherein the activation reactor comprises an inlet fluidly connected with the at least one hydrogen extraction unit whereby at least a portion of a hydrogen-lean gas stream, at least a portion of a hydrogen-rich gas stream, or at least a portion of both may be introduced into the activation reactor.