Efforts from all sectors of society including the shipping industry are needed to limit the overall global temperature rise to within 2 degrees C of pre-industrial levels by 2050. The hybridisation of Proton Exchange Membrane Fuel Cells (PEMFC) and Lithium-ion batteries for coastal ship propulsion systems may potentially offer beneficial emission performance. However, such hybrid systems are constrained by power and energy density limitations, lifetime; and costs as well as life-cycle emissions of alternative fuel/energy. There is a lack of holistic design methodology dealing with these uncertainties in the literature. This paper proposes a holistic design methodology for coastal hybrid ships based upon a developed model. The power source sizing problem is solved using constrained mixed-integer multi-objective optimisation in the external layer. The global optimum energy management strategies for an averaged operating profile are obtained from deterministic dynamic programming in the inner layer, while considering power source degradations in the sizing algorithm. The proposed methodology was applied to a coastal ferry to investigate the feasibility and benefit potential of adopting the hybrid PEMFC and battery propulsion system in Matlab. The case studies indicate that the proposed propulsion system can achieve at least a 65% life-cycle greenhouse gas reduction for the considered two cases. (C) 2019 Hydrogen Energy Publications LLC. Published by Elsevier Ltd. All rights reserved.