Systems and methods are provided for production of carbon nanotubes and H2 using a reaction system configuration that is suitable for large scale production. In the reaction system, a substantial portion of the heat for the reaction can be provided by using a heated gas stream. Optionally, the heated gas stream can correspond to a heated H2 gas stream. By using a heated gas stream, when the catalyst precursors for the floating catalyst-chemical vapor deposition (FC-CVD) type catalyst are added to the gas stream, the gas stream can be at a temperature of 1000° C. or more. This can reduce or minimize loss of catalyst precursor material and/or deposition of coke on sidewalls of the reactor. Additionally, a downstream portion of the reactor can include a plurality of flow channels of reduced size that are passed through a heat exchanger environment, such as a shell and tube heat exchanger. This can provide cooling of the gas flow after catalyst formation to allow for carbon nanotube formation, while also reducing the Reynolds number of the flow sufficiently to provide laminar flow within the region where carbon nanotubes are formed.